AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1995
File Nos. 33-7404 and 811-4760
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 34
AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 35
BT INVESTMENT FUNDS
(Exact Name of Registrant as Specified in Charter)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 617-423-0800
PHILIP W. COOLIDGE Copies to: Burton M. Leibert, Esq.
SIGNATURE BROKER-DEALER SERVICES, INC. Willkie Farr & Gallagher
6 ST. JAMES AVENUE One Citicorp Center
BOSTON, MASSACHUSETTS 02116 153 East 53rd Street
(Name and Address of Agent for Service) New York, New York 10022
It is proposed that this filing will become effective (check appropriate box)
-- immediately upon filing pursuant to -- on July 31, 1995 pursuant to
-- paragraph (b) -- paragraph (b)
-- 60 days after filing pursuant to -- on (date) pursuant to
-- paragraph (a)(i) -- paragraph (a)(i)
-- 75 days after filing pursuant to -- on (date) pursuant to
-- paragraph (a)(ii) -- paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
-- this post-effective amendment designates a new effective date for a
-- previously filed post-effective amendment.
ASSET MANAGEMENT PORTFOLIO AND BT INVESTMENT PORTFOLIOS HAVE EACH ALSO EXECUTED
THIS REGISTRATION STATEMENT.
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES OF BENEFICIAL
INTEREST PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
REGISTRANT FILED THE NOTICE REQUIRED BY RULE 24F-2 ON NOVEMBER 30, 1994 FOR
REGISTRANT'S FISCAL YEAR ENDED SEPTEMBER 30, 1994. REGISTRANT FILED THE NOTICE
REQUIRED BY RULE 24F-2 ON FEBRUARY 28, 1995 FOR REGISTRANT'S FISCAL YEAR ENDED
DECEMBER 31, 1994. REGISTRANT FILED THE NOTICE REQUIRED BY RULE 24F-2 ON MAY 26,
1995 FOR REGISTRANT'S FISCAL YEAR ENDED MARCH 31, 1995.
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<PAGE>
EXPLANATORY NOTE
This Post-Effective Amendment No. 34 (the "Amendment") to the
Registrant's Registration Statement on Form N-1A is being filed with respect to
the BT Investment Lifecycle Short Range Fund, BT Investment Lifecycle Mid Range
Fund and BT Investment Lifecycle Long Range Fund (the "Funds"), each a series of
shares of the Registrant. The Amendment is being filed solely in order to bring
the Funds' audited financial statements up to date and to make other
non-material changes.
The series of shares of the Registrant are listed below and are offered
by Prospectuses in the respective Part A of the Post-Effective Amendments to the
Registrant's Registration Statement as identified. Each of the following is a
separate series of shares of the Registrant. This Amendment does not relate to,
amend or otherwise affect the Prospectuses contained in prior Post-Effective
Amendments, and, therefore, pursuant to Rule 485(d) under the Securities Act of
1933, as amended (the "1933 Act"), does not affect the effectiveness of such
Post-Effective Amendments.
Post-Effective
Amendment No.
BT Investment Short/Intermediate U.S. Government Securities Fund 33
BT Investment Capital Appreciation Fund 33
BT Investment International Equity Fund 33
BT Investment Cash Management Fund 33
BT Investment Liquid Assets Fund 33
BT Investment Treasury Money Fund 33
BT Investment 100% Treasury Fund 33
BT Investment Intermediate Tax Free Fund 33
BT Investment Utility Fund 33
BT Investment Tax Free Money Fund 33
BT Investment NY Tax Free Money Fund 33
BT Investment Pacific Basin Fund 32
BT Investment Latin American Equity Fund 32
BT Investment Global High Yield Securities Fund 32
BT Investment Small Cap Fund 32
BT Investment European Equity Fund 26
BT Investment International Bond Fund 29
<PAGE>
BT INVESTMENT FUNDS
BT INVESTMENT LIFECYCLE SHORT RANGE FUND
BT INVESTMENT LIFECYCLE MID RANGE FUND AND
BT INVESTMENT LIFECYCLE LONG RANGE FUND
FORM N-1A
CROSS REFERENCE SHEET
Part A
Item No. Headings in Prospectus
1. Cover Page . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . Summary of Fund Expenses
3. Condensed Financial Information . . Fund's Financial Highlights
4. General Description of Registrant . Cover Page; Investment Objective,
Policies and Risks; Management of
the Trust and Portfolios
5. Management of the Fund . . . . . . . Management of the Trust and
6. Capital Stock and Other Securities . Cover Page; Purchase and
Redemption of Shares; Dividends,
Distributions and Taxes;
Management of the Trust and
Portfolios; Performance
Information and Reports
7. Purchase of Securities Being Offered Purchase and Redemption of Shares;
Net Asset Value
8. Redemption or Repurchase . . . . . . Purchase and Redemption of Shares
9. Pending Legal Proceedings . . . . . Not applicable
Part B Headings in Statement of
Item No. Additional Information
10. Cover Page . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . Contents
12. General Information and History . . Not applicable
13. Investment Objectives and Policies . Investment Objective, Policies and
Risks
14. Management of the Fund . . . . . . . Management of the Trust and
Portfolios
15. Control Persons and Principal
Holders of Securities . . . . . . . See Prospectus "Organization of
the Trust"
16. Investment Advisory and Other Services Management of the Trust and
Portfolios
17. Brokerage Allocation and Other
Practices . . . . . . . . . . . . . Investment Objective , Policies
and Risks
18. Capital Stock and Other Securities . Organization of the Trust; see
Prospectus "Dividends,
Distributions and Taxes" and
"Organization of the Trust"
19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . Purchase and Redemption
Information; Net Asset Value
20. Tax Status . . . . . . . . . . . . . Taxes; see Prospectus "Dividends,
Distributions and Taxes"
21. Underwriters . . . . . . . . . . . . See Prospectus "Management of the
Trust and Portfolios"
22. Calculations of Yield Quotations of
Money Market Funds . . . . . . . . . Performance Information
23. Financial Statements . . . . . . . . Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
BT INVESTMENT
PROSPECTUS: AUGUST 1, 1995
Please read this Prospectus carefully before investing and retain it for future
reference. It contains important information about the Funds that you should
know and can refer to in deciding whether the Funds' goals match your own.
A Statement of Additional Information (SAI) with the same date has been filed
with the Securities and Exchange Commission ("SEC"), and is incorporated herein
by reference. You may request a free copy of the Statement by calling the Funds'
Service Agent at 1-800-422-6577.
UNLIKE OTHER MUTUAL FUNDS, THE FUNDS SEEK TO ACHIEVE THEIR INVESTMENT OBJECTIVES
BY INVESTING ALL OF THEIR INVESTABLE ASSETS IN THE PORTFOLIOS WHICH ARE SEPARATE
FUNDS WITH IDENTICAL INVESTMENT OBJECTIVES. SEE "SPECIAL INFORMATION CONCERNING
MASTER-FEEDER FUND STRUCTURE" ON PAGE 13.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, BANKERS TRUST COMPANY AND THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. INVESTMENT IN THE FUNDS ARE SUBJECT TO RISK THAT MAY CAUSE THE
VALUE OF AN INVESTMENT TO FLUCTUATE, AND WHEN THE INVESTMENT IS REDEEMED, THE
VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED BY THE
INVESTOR.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Lifecycle Funds:
Short Range Fund
Mid Range Fund
Long Range Fund
o A family of asset allocation funds, each investing in stocks, bonds and money
market instruments to achieve a distinct goal.
BANKERS TRUST COMPANY
Investment Adviser of the
Portfolio and Administrator
SIGNATURE BROKER-
DEALER SERVICES, INC.
Distributor
6 St. James Avenue
Boston, Massachusetts 02116
<PAGE>
TABLE OF CONTENTS
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PAGE
................................................................................
Summary of Fund Expenses 3
Fund Financial Highlights 4
Investment Objective, Policies and Risks 6
Risk Factors: Matching the Funds to Your Investment Needs 10
Net Asset Value 14
Purchase and Redemption of Shares 15
Dividends, Distributions and Taxes 18
Performance Information and Reports 18
Management of the Trust and Portfolios 19
Additional Information 24
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<PAGE>
SUMMARY OF FUND EXPENSES
The following table provides (i) a summary of expenses relating to purchases
and sales of the shares of BT Investment Lifecycle Short Range Fund, BT
Investment Lifecycle Mid Range Fund and BT Investment Lifecycle Long Range
Fund (each a "Fund" and collectively, the "Funds"), and the aggregate annual
operating expenses of each Fund and the corresponding Portfolio (as defined
below), as a percentage of average net assets of that Fund; and (ii) an
example illustrating the dollar cost of such expenses on a $1,000 investment
in each Fund. THE TRUSTEES OF THE BT INVESTMENT FUNDS (THE "TRUST") BELIEVE
THAT THE AGGREGATE PER SHARE EXPENSES OF EACH FUND AND THE ASSET MANAGEMENT
PORTFOLIO III, ASSET MANAGEMENT PORTFOLIO II AND ASSET MANAGEMENT PORTFOLIO
(EACH A "PORTFOLIO" AND COLLECTIVELY, THE "PORTFOLIOS") WILL BE LESS THAN OR
APPROXIMATELY EQUAL TO THE EXPENSES WHICH THAT FUND WOULD INCUR IF THE TRUST
RETAINED THE SERVICES OF AN INVESTMENT ADVISER AND THE INVESTABLE ASSETS
("ASSETS") OF THAT FUND WERE INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING
HELD BY THE CORRESPONDING PORTFOLIO.
--------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net Short Range Mid Range Long Range
assets of the Fund) Fund Fund Fund
................................................................................
Investment advisory fee (after reimbursement 0.45% 0.48% 0.56%
or waiver)
12b-1 fees 0.00 0.00 0.00
Other expenses (after reimbursements or 0.55% 0.52% 0.44%
waivers)
................................................................................
Total operating expenses (after reimbursements
or waivers) 1.00% 1.00% 1.00%
................................................................................
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
.........................................................................................................
<S> <C> <C> <C> <C>
You would pay the following expenses for each Fund on
a $1,000 investment, assuming (1) 5% annual return
and (2) redemption at the end of each time period $10 $32 $55 $122
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</TABLE>
The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of each of the
Funds. While reimbursement of distribution expenses in amounts up to 0.20% of
average net assets are authorized to be made pursuant to the Plan of
Distribution under Rule 12b-1 of the Investment Company Act of 1940, as
amended (the "1940 Act"), it is not expected that any payments will actually
be made under that plan in the foreseeable future. Bankers Trust Company
("Bankers Trust") has voluntarily agreed to waive a portion of its investment
advisory fee. Without such waiver, each Portfolio's investment advisory fee
would be equal to 0.65%. The expense table and the example reflect a voluntary
undertaking by Bankers Trust or Signature Broker-Dealer Services, Inc.
("Signature") to waive or reimburse expenses such that total operating
expenses of each Fund and the corresponding Portfolio will not exceed 1.00% of
the Fund's average net assets annually. In the absence of this undertaking,
for the fiscal year ended March 31, 1995 total operating expenses of the BT
Investment Lifecycle Short Range Fund, BT Investment Lifecycle Mid Range Fund
and BT Investment Lifecycle Long Range Fund, and the corresponding Portfolio,
would have been equal to approximately 1.82%, 1.76% and 1.91%, respectively,
of each Fund's average net assets annually. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while each example assumes a 5%
annual return, actual performance will vary and may result in a return
greater or less than 5%.
Shares of the Funds are sold by Signature as the Trust's distributor (the
"Distributor") to customers of Bankers Trust or to customers of another bank
or a dealer or other institution that has a sub-servicing agreement with
Bankers Trust (along with Bankers Trust, a "Servicing Agent"). Some Service
Agents may impose certain conditions on their customers in addition to or
different from those imposed by each Fund and may charge their customers a
direct fee for their services. Each Service Agent has agreed to transmit to
shareholders who are its customers appropriate disclosures of any fees that it
may charge them directly.
For more information with respect to the expenses of the Funds and the
Portfolios, see "Management of the Trust and Portfolios" herein.
FUND FINANCIAL HIGHLIGHTS
The following tables show selected data for a share outstanding, total
investment return, ratios to average net assets and other supplemental data of
the Funds for the periods indicated and have been audited by Coopers & Lybrand
L.L.P., the Funds' independent accountants, whose report thereon appears in
the Funds' Annual Report which is incorporated by reference in the Funds'
Statement of Additional Information.
<TABLE>
<CAPTION>
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BT INVESTMENT LIFECYCLE SHORT RANGE FUND
For the period
October 15, 1993
For the (Commencement
year ended of Operations) to
March 31, 1995 March 31, 1994
------------------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA $ 9.60 $ 10.00
Net Asset Value, Beginning of Period ------ ------
Income from Investment Operations
Net Investment Income 0.41 0.13
Net Realized and Unrealized (Loss) on Securities and
Futures Transactions (0.13) (0.47)
................................................................................................
Total from Investment Operations 0.28 (0.34)
................................................................................................
Less Dividends and Distributions
Dividends from Net Investment Income (0.37) (0.06)
Distributions from Net Realized Gain from Securities
and Futures Transactions (0.01) --
................................................................................................
Total Dividends and Distributions (0.38) (0.06)
................................................................................................
Net Asset Value, End of Period $ 9.50 $ 9.60
................................................................................................
TOTAL INVESTMENT RETURN 3.08% (7.39)%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 4.47% 3.12%*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Asset Management Portfolio III 1.00% 1.00%*
Decrease Reflected in Above Expense Ratio Due to Absorption
of Expenses by Bankers Trust 0.82% 1.12%*
Net Assets, End of Period (000's omitted) $21,137 $17,582
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*Annualized
</TABLE>
<PAGE>
<TABLE>
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<CAPTION>
BT INVESTMENT LIFECYCLE MID RANGE FUND
For the period
October 14, 1993
For the (Commencement
year ended of Operations) to
March 31, 1995 March 31, 1994
------------------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA $ 9.45 $ 10.00
Net Asset Value, Beginning of Period ------ ------
Income from Investment Operations
Net Investment Income 0.37 0.11
Net Realized and Unrealized Gain (Loss) on
Securities and Futures Transactions 0.11 (0.60)
................................................................................................
Total from Investment Operations 0.48 (0.49)
................................................................................................
Less Dividends
Dividends from Net Investment Income (0.32) (0.06)
................................................................................................
Net Asset Value, End of Period $ 9.61 $ 9.45
...............................................................................................
TOTAL INVESTMENT RETURN 5.24% (10.48)%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 4.01% 2.77%*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Asset Management Portfolio II 1.00% 1.00%*
Decrease Reflected in Above Expense Ratio Due to Absorption
of Expenses by Bankers Trust 0.76% 1.10%*
Net Assets, End of Period (000's omitted) $25,733 $19,170
------------------------------------------------------------------------------------------------
*Annualized
</TABLE>
<PAGE>
<TABLE>
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<CAPTION>
BT INVESTMENT LIFECYCLE LONG RANGE FUND
For the period
November 16, 1993
For the (Commencement
year ended of Operations) to
March 31, 1995 March 31, 1994
------------------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA $ 9.68 $ 10.00
Net Asset Value, Beginning of Period ------ ------
Income from Investment Operations
Net Investment Income 0.30 0.02
Net Realized and Unrealized Gain (Loss) on
Securities and Futures Transactions 0.32 (0.34)
.................................................................................................
Total from Investment Operations 0.62 (0.32)
.................................................................................................
Less Dividends
Dividends from Net Investment Income (0.23) --
.................................................................................................
Total Dividends (0.23) --
.................................................................................................
Net Asset Value, End of Period $ 10.07 $ 9.68
.................................................................................................
TOTAL INVESTMENT RETURN 6.60% (8.42)%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 3.41% 2.69%*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Asset Management Portfolio 1.00% 1.00%*
Decrease Reflected in Above Expense Ratio Due to Absorption
of Expenses by Bankers Trust 0.91% 6.00%*
Net Assets, End of Period (000's omitted) $13,366 $ 5,203
------------------------------------------------------------------------------------------------
*Annualized
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RISKS
Each Fund seeks to achieve its investment objective by allocating investments
among three asset classes: stocks, bonds, and short-term instruments. The
Funds' investment objectives are as follows:
o BT Investment Lifecycle Short Range Fund -- seeks high income over the
long term consistent with conservation of capital.
o BT Investment Lifecycle Mid Range Fund -- seeks long term capital growth,
current income, and growth of income, consistent with reasonable
investment risk.
o BT Investment Lifecycle Long Range Fund -- seeks high total return with
reduced risk over the long term.
The Funds offer investors a convenient means of diversifying their holdings in
various classes of assets while relieving those investors of the
administrative burdens typically associated with purchasing and holding these
instruments, such as determining asset class allocations, coordinating
maturities and reinvestments, providing for safekeeping and maintaining
detailed records.
The Trust seeks to achieve the investment objective of each Fund by investing
all the Assets of the BT Investment Lifecycle Short Range Fund in the Asset
Management Portfolio III, the BT Investment Lifecycle Mid Range Fund in the
Asset Management Portfolio II, and the BT Investment Lifecycle Long Range Fund
in the Asset Management Portfolio. Each corresponding Portfolio has the same
investment objective as the Fund. There can be no assurances that the
investment objective of any of the Funds or the Portfolios will be achieved.
The investment objective of each of the Funds and the Portfolios is not a
fundamental policy and may be changed upon notice to but without the approval
of a Fund's shareholders or a Portfolio's investors, respectively. See
"Special Information Concerning Master-Feeder Fund Structure" on page 13
herein.
ALL PORTFOLIOS
Investment Allocations.In seeking to achieve each Portfolio's investment
objective, Bankers Trust, each Portfolio's investment adviser (the "Adviser"),
allocates the Portfolio's assets among three principal asset classes (as
discussed below): stocks, bonds and short-term instruments. The asset classes
stated below are based on risk characteristics and may not be identical to the
Portfolio's total aggregate holdings of the three types of instruments. For
example, a Portfolio may buy or sell a futures contract to increase or
decrease the Portfolio's exposure to the stock market. Bankers Trust will
normally allocate the assets of each Fund's corresponding Portfolio within the
following parameters:
------------------------------------------------------------------------------
SHORT TERM BONDS STOCKS
..............................................................................
o BT INVESTMENT LIFECYCLE SHORT RANGE FUND 0-65% 35-70% 0-30%
o BT INVESTMENT LIFECYCLE MID RANGE FUND 0-50% 30-60% 20-50%
o BT INVESTMENT LIFECYCLE LONG RANGE FUND 0-25% 25-55% 40-70%
------------------------------------------------------------------------------
The asset classes of the corresponding Portfolio of each Fund fluctuates
around the following neutral position: BT Investment Lifecycle Short Range
Fund -- 30% to short-term investments, 55% to bonds and 15% to stocks; BT
Investment Lifecycle Mid Range Fund -- 20% to short-term investments, 45% to
bonds and 35% to stocks; and BT Investment Lifecycle Long Range Fund -- 10% to
short-term investments, 35% to bonds and 55% to stocks.
As of March 31, 1995, the asset classes of the corresponding Portfolio of each
Fund were as follows: BT Investment Lifecycle Short Range Fund -- 39% to
short-term investments, 50% to bonds and 11% to stocks; BT Investment
Lifecycle Mid Range Fund -- 27% to short-term investments, 42% to bonds and
31% to stocks; and BT Investment Lifecycle Long Range Fund -- 16% to short-
term investments, 34% to bonds and 50% to stocks.
Each Portfolio may make substantial temporary investments in cash and money
market instruments for defensive purposes when, in Bankers Trust's judgment,
market conditions warrant, or when the Portfolio has less than $10 million in
assets.
Bankers Trust regularly reviews each Portfolio's investment allocations, and
will gradually vary them over time to favor asset classes that, in Bankers
Trust's current judgment, provide the most favorable total return outlook
consistent with each Portfolio's investment objective. In making allocation
decisions, Bankers Trust will evaluate projections of risk, market and
economic conditions, volatility, yields and expected return. Bankers Trust
will seek to reduce risk relative to an investment in common stocks by
emphasizing the bond and short-term classes when stocks appear overvalued.
Bankers Trust's management will include use of database systems to help
analyze past situations and trends, research specialists in each of the asset
classes to help in securities selection, portfolio management professionals to
determine asset allocation and to select individual securities, and its own
credit analysis as well as credit analysis provided by rating services to
determine the quality of debt securities.
Short-Term Securities. These securities include the following types of
domestic and foreign securities and money market instruments with remaining
maturities of thirteen months or less. Bankers Trust will seek to maximize
total return within the short-term class by taking advantage of yield
differentials between different instruments, issuers and currencies. The
short-term class consists of foreign and domestic: (i) short-term obligations
of sovereign governments, their agencies, instrumentalities, authorities or
political subdivisions; (ii) other short-term debt securities rated Aa or
higher by Moody's Investors Service, Inc. ("Moody's") or AA or higher by
Standard & Poor's Corporation ("S&P") or, if unrated, of comparable quality in
the opinion of Bankers Trust; (iii) commercial paper; (iv) bank obligations,
including negotiable certificates of deposit, time deposits and bankers'
acceptances; and (v) repurchase agreements. At the time a Portfolio invests in
commercial paper, bank obligations or repurchase agreements, the issuer or the
issuer's parent must have outstanding debt rated Aa or higher by Moody's or AA
or higher by S&P or outstanding commercial paper or bank obligations rated
Prime-1 by Moody's or A-1 by S&P; or, if no such ratings are available, the
instrument must be of comparable quality in the opinion of Bankers Trust.
These instruments may be denominated in U.S. dollars or foreign currencies and
will have been determined to be of high quality by a nationally recognized
statistical rating organization ("NRSRO") or, if unrated, by Bankers Trust.
Bonds. These securities include investment grade domestic and foreign fixed-
income securities with remaining maturities or durations greater than thirteen
months. Bankers Trust seeks to maximize total returns within the bond class by
adjusting each Portfolio's investments in securities with different credit
qualities, maturities, and coupon or dividend rates, as well as by exploiting
yield differentials between securities. The bond class consists of bonds, notes,
adjustable rate preferred stocks, convertible bonds, mortgage-related and
asset-backed securities, domestic and foreign government and government agency
securities, zero coupon bonds, Rule 144A securities and other intermediate and
long-term securities. As with the short-term class, these securities may be
denominated in U.S. dollars or foreign currency. No more than 5% of each
Portfolio's net assets (at the time of investment) may be in lower rated (BB/Ba
or lower), high yield bonds. Each Portfolio may retain any bond whose rating
drops below investment grade if it is in the best interest of the respective
Fund's shareholders. Securities rated BB/Ba by a NRSRO are considered to have
speculative characteristics. See the Appendix to the Statement of Additional
Information for further information on these securities.
Stocks. These securities include domestic and foreign equity securities of all
types (other than adjustable rate preferred stocks, included in the bond
class). Bankers Trust seeks to maximize total return within this asset class
by actively allocating assets to industry sectors expected to benefit from
major trends, and to individual stocks that it believes to have superior
investment potential. Securities in the stock class may include common stocks,
fixed-rate preferred stocks (including convertible preferred stocks),
warrants, rights, depositary receipts, securities of closed-end investment
companies, and other equity securities issued by companies of any size,
located anywhere in the world.
Bankers Trust believes that diversification of a Portfolio's investments among
the asset classes will, under most market conditions, better enable each
Portfolio to reduce risk while seeking high total return consistent with the
Portfolio's objectives.
Maturity and Duration. The remaining maturity of a fixed-income instrument is
the amount of time left before the bond's principal is due. The duration of an
instrument or a group of instruments measures the instrument's or group of
instruments' value's expected response to changes in interest rates.
Foreign Investments and Currency Management. Each Portfolio focuses on U.S.
investment opportunities, but may invest a portion of its assets in foreign
securities. Each Portfolio will not invest more than 25% of its total assets
in equity securities of foreign issuers under normal conditions. Each
Portfolio also will not invest more than 25% of its total assets in each of
the bond and short-term classes in foreign securities and securities
denominated in foreign currencies. Foreign securities of all types will
normally constitute less than 50% of each Portfolio's assets.
In connection with each Portfolio's investments denominated in foreign
currencies, Bankers Trust may choose to utilize a variety of currency
management strategies. Bankers Trust seeks to take advantage of different
yield, risk, and return characteristics that different currencies, currency
denominations, and countries can provide to U.S. investors. In doing so,
Bankers Trust will consider such factors as the outlook for currency
relationships, current and anticipated interest rates, levels of inflation
within various countries, prospects for relative economic growth, and
government policies influencing currency exchange rates and business
conditions.
To manage exposure to currency fluctuations, each Portfolio may enter into
forward currency exchange contracts (agreements to exchange one currency for
another at a future date), may buy and sell options and futures contracts
relating to foreign currencies, and may purchase securities indexed to foreign
currencies. Each Portfolio will use currency exchange contracts in the normal
course of business to lock in an exchange rate in connection with purchases
and sales of securities denominated in foreign currencies. These currency
management strategies allow Bankers Trust to hedge portfolio securities, to
shift investment exposure from one currency to another, or to attempt to
profit from anticipated declines in the value of a foreign currency relative
to the U.S. dollar. Some of these strategies will require the Portfolio to set
aside liquid assets in a segregated custodial account to cover its
obligations. For additional information on foreign investments and currency
management, see "Additional Information" and the Statement of Additional
Information.
Options and Futures Contracts. Each Portfolio may buy and sell options and
futures contracts to manage its exposure to changing interest rates, security
prices and currency exchange rates, and as an efficient means of managing
allocations between asset classes. Each Portfolio may invest in options and
futures based on any type of security or index related to the Portfolio's
investments, including options and futures traded on foreign exchanges.
Some options and futures strategies, including selling futures, buying puts,
and writing calls, hedge the Portfolios' investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other, or with forward contracts, in order to adjust the
risk and return characteristics of an overall strategy. See "Additional
Information" for further information on options on stocks, options and futures
contracts on stock indexes, options on futures contracts, foreign currency
exchange transactions, and options on foreign currencies.
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES
Each Portfolio may also utilize the following investments and investment
techniques and practices: when-issued and delayed-delivery basis, short sales,
indexed securities, securities lending, repurchase agreements, Rule 144A
securities, zero coupon debt securities, government securities, mortgage-
backed securities, collateralized mortgage obligations, asset-backed
securities and foreign investments. See "Additional Information" for further
information.
ADDITIONAL INVESTMENT LIMITATIONS
As diversified funds, no more than 5% of the assets of each Portfolio may be
invested in the securities of one issuer (other than U.S. Government
securities), except that up to 25% of a Portfolio's assets may be invested
without regard to this limitation. Each Portfolio will not invest more than
25% of its assets in the securities of issuers in any one industry. These are
fundamental investment policies of each Portfolio which may not be changed
without investor approval. No more than 15% of each Portfolio's net assets may
be invested in illiquid or not readily marketable securities (including
repurchase agreements and time deposits maturing in more than seven calendar
days). Additional investment policies of each Portfolio are contained in the
Statement of Additional Information.
RISK FACTORS; MATCHING THE FUNDS TO YOUR INVESTMENT NEEDS
The Lifecycle Funds are designed to make investing for your future easy. Each
Lifecycle Fund is diversified across stocks, bonds, and short-term
instruments; each Fund is professionally managed by a team of Bankers Trust
experts; and each Fund is specially designed to meet the investment objectives
of investors at different points in the wealth accumulation cycle. Thus
investing in the Lifecycle Funds is easier than typical mutual funds, since
with the Lifecycle Funds the worry of deciding how much to put in stocks or
bonds is left to professionals. All you decide is how long it will be until
you need your savings.
o BT Investment Lifecycle Short Range Fund: This Fund is designed for
investors with less than five years until they need their savings. Since
the Fund seeks high income over the long-term, it may be appropriate for
investors who need current income rather than capital growth and who are
not willing to ride out market fluctuations.
o BT Investment Lifecycle Mid Range Fund: This Fund is designed for
investors who will not need their savings for at least five years. Since
the Fund seeks long-term capital growth, current income, and growth of
income, it may be appropriate for investors who can tolerate some short-
term market value fluctuation, but who also need the added stability of
share value that can be derived from investing for income.
o BT Investment Lifecycle Long Range Fund: This Fund is designed for
investors who have more than ten years until they will need their
savings. In other words, since the Fund seeks high total return with
reduced risk over the long-term, the Fund is appropriate for investors
who are willing to ride out market fluctuations.
Each Fund is designed for investors seeking to achieve their investment
objectives through a variety of investments selected at the discretion of the
Portfolio's manager, yet subject to parameters that generally limit risk and
exposure to any one asset class. Each Portfolio diversifies its investments
among short-term instruments, bonds and stocks as economic conditions change.
Each Fund may also be appropriate for investors who wish to moderate risks
over time by taking advantage of the asset class with the best relative value.
Each Portfolio allocates its investments within the parameters described in
"Investment Objective, Policies and Risks." Since each Portfolio's asset
allocation involves significant investment in short-term instruments and bonds
over time, it is expected that each Portfolio will be less volatile than a
fund that invests primarily in common stocks. Each Fund's share price, yield
and total return fluctuate and your investment may be worth more or less than
your original cost when you redeem your shares.
Each Fund's performance may be affected by many different factors depending on
the corresponding Portfolio's emphasis. Short-term instruments are generally
the most stable securities in which each Portfolio will invest. Their returns
depend primarily on current short-term interest rates although currency
fluctuations can also be significant with respect to foreign securities.
The bond class is affected primarily by interest rates: prices of fixed-income
securities tend to rise when interest rates fall, and fall when interest rates
rise. Interest rate changes will have a greater impact on a Portfolio if it is
heavily invested in long-term or zero-coupon bonds. Fixed-income securities
may also be affected by changes in credit quality.
The stock class is subject to the risks of stock market investing, including
the possibility of sudden or prolonged market declines as well as the risks
associated with individual companies. These risks may be intensified for
investments in smaller or less well-known companies or in foreign securities.
RISKS OF INVESTING IN FOREIGN SECURITIES
The investment in foreign securities may involve additional risks. Foreign
securities usually are denominated in foreign currencies, which means their
value will be affected by changes in the strength of foreign currencies
relative to the U.S. dollar as well as the other factors that affect security
prices. Foreign companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there often is less
publicly available information about their operations. Generally, there is
less governmental regulation of foreign securities markets, and security
trading practices abroad may offer less protection to investors such as a
Portfolio. The value of such investments may be adversely affected by changes
in political or social conditions, diplomatic relations, confiscatory
taxation, expropriation, nationalization, limitation on the removal of funds
or assets, or imposition of (or change in) exchange control or tax regulations
in those foreign countries. Foreign securities may be less liquid or more
volatile than domestic investments. Bankers Trust considers these factors in
making investments for each Portfolio and limits the amount of each
Portfolio's assets that may be invested in foreign securities to 25% of its
total assets for each asset class and to less than 50% for all classes under
normal conditions. However, within each Portfolio's limitations, investments
in any one country or currency are not restricted.
DERIVATIVES
Each Portfolio may invest in various instruments that are commonly known as
derivatives. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may
be more volatile or less liquid than more traditional debt securities. There
are, in fact, many different types of derivatives and many different ways to
use them. There are a range of risks associated with those uses. Futures and
options are commonly used for traditional hedging purposes to attempt to
protect a fund from exposure to changing interest rates, securities prices or
currency exchange rates and for cash management purposes as a low cost method
of gaining exposure to a particular securities market without investing
directly in those securities. However, some derivatives are used for leverage,
which tends to magnify the effects of an instrument's price changes as market
conditions change. Leverage involves the use of a small amount of money to
control a large amount of financial assets and can, in some circumstances,
lead to significant losses. The Adviser will use derivatives only in
circumstances where the Adviser believes they offer the most economical means
of improving the risk/reward profile of a Portfolio. Derivatives will not be
used to increase portfolio risk above the level that could be achieved using
only traditional investment securities or to acquire exposure to changes in
the value of assets or indexes that by themselves would not be purchased for a
Portfolio. The use of derivatives for non-hedging purposes may be considered
speculative. A description of the derivatives that the Portfolios may use and
some of their associated risks is found under "Additional Information."
Each Portfolio's investments in options, futures or forward contracts, and
similar strategies depend on Bankers Trust's judgment as to the potential
risks and rewards of different types of strategies. Options and futures can be
volatile investments, and may not perform as expected. If Bankers Trust
applies a hedge at an inappropriate time or judges price trends incorrectly,
options and futures strategies may lower a Portfolio's return. Options and
futures traded on foreign exchanges generally are not regulated by U.S.
authorities, and may offer less liquidity and less protection to a Portfolio
in the event of default by the other party to the contract. Each Portfolio
could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could
not close out its positions because of an illiquid secondary market.
Further descriptions of a number of investments and investment techniques
available to the Portfolios, including foreign investments and the use of
options and futures, and certain risks associated with these investments and
techniques are included under "Additional Information."
PORTFOLIO TURNOVER
The frequency of portfolio transactions -- a Portfolio's turnover rate -- will
vary from year to year depending on market conditions. Each Portfolio's
portfolio turnover rates were as follows: Asset Management Portfolio III --
111% for fiscal year ended March 31, 1995 and 84% (not annualized) for the
period from October 15, 1993 (commencement of operations) through March 31,
1994; Asset Management Portfolio II -- 105% for fiscal year ended March 31,
1995 and 79% (not annualized) for the period from October 14, 1993
(commencement of operations) through March 31, 1994; and Asset Management
Portfolio -- 92% (not annualized) for fiscal year ended March 31, 1995 and 56%
for the period from September 16, 1993 (commencement of operations) through
March 31, 1994. Because a higher turnover rate increases transaction costs and
may increase taxable capital gains, Bankers Trust carefully weighs the
anticipated benefits of short-term investment against these consequences.
SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Funds seek to achieve their investment objectives by
investing all of their Assets in the corresponding Portfolio, a separate
registered investment company with the same investment objectives as the
respective Fund. Therefore, an investor's interest in the Portfolio's
securities is indirect, like investments in other investment companies and
pooled investment vehicles. In addition to selling a beneficial interest to a
Fund, a Portfolio may sell beneficial interests to other mutual funds or
institutional investors. Such investors will invest in the Portfolio on the
same terms and conditions and will pay a proportionate share of the
Portfolio's expenses. However, the other investors investing in the Portfolio
are not required to sell their shares at the same public offering price as the
Funds due to variations in sales commissions and other operating expenses.
Therefore, investors in the Funds should be aware that these differences may
result in differences in returns experienced by investors in the different
funds that invest in the Portfolios. Such differences in returns are also
present in other mutual fund structures. Information concerning other holders
of interests in the Portfolios is available by contacting Bankers Trust at
(800) 422-6577.
Smaller funds investing in the Portfolios may be materially affected by the
actions of larger funds investing in the Portfolios. For example, if a large
fund withdraws from a Portfolio, the remaining funds may experience higher pro
rata operating expenses, thereby producing lower returns (however, this
possibility exists as well for traditionally structured funds which have large
institutional investors). Additionally, the Portfolio may become less diverse,
resulting in increased portfolio risk. Also, funds with a greater pro rata
ownership in the Portfolios could have effective voting control of the
operations of the Portfolios. Whenever the Trust is requested to vote on
matters pertaining to the Portfolio, the Trust will, except as permitted by the
SEC, hold a meeting of shareholders of the corresponding Fund and will cast
all of its votes in the same proportion as the votes of the Fund's
shareholders. Fund shareholders who do not vote will not affect the Trust's
votes at the Portfolio meeting. The percentage of the Trust's votes
representing Fund shareholders not voting will be voted by the Trustees or
officers of the Trust in the same proportion as the Fund shareholders who do,
in fact, vote. Certain changes in a Portfolio's investment objectives,
policies or restrictions may require the corresponding Fund to withdraw its
interest in the Portfolio. Any such withdrawal could result in a distribution
"in kind" of portfolio securities (as opposed to a cash distribution from the
Portfolio). If securities are distributed, a Fund could incur brokerage, tax
or other charges in converting the securities to cash. In addition, the
distribution in kind may result in a less diversified portfolio of investments
or adversely affect the liquidity of a Fund. Notwithstanding the above, there
are other means for meeting redemption requests, such as borrowing.
A Fund may withdraw its investments from the corresponding Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the shareholders of the Fund to do so. Upon any such withdrawal,
the Board of Trustees of the Trust would consider what action might be taken,
including the investment of all the Assets of a Fund in another pooled
investment entity having the same investment objectives as the Fund or the
retaining of an investment adviser to manage the Fund's assets in accordance
with the investment policies described below with respect to the Portfolio.
Each Fund's investment objective is not a fundamental policy and may be
changed upon notice to but without the approval of the Fund's shareholders. If
there is a change in a Fund's investment objective, the Fund's shareholders
should consider whether the Fund remains an appropriate investment in light of
their then-current needs. The investment objective of each Portfolio is also
not a fundamental policy. Shareholders of the Funds will receive 30 days prior
written notice with respect to any change in the investment objective of the
Funds or the Portfolios. See "Investment Objective, Policies and Risks" for a
description of the fundamental policies of the Portfolios that cannot be
changed without approval by the holders of "a majority of the outstanding
voting securities" (as defined in the 1940 Act) of each Portfolio.
For descriptions of the investment objective, policies and restrictions of the
Portfolios, see "Investment Objective, Policies and Risks." For descriptions
of the management of the Portfolios, see "Management of the Trust and
Portfolios" herein and in the Statement of Additional Information. For
descriptions of the expenses of the Portfolios, see "Management of the Trust
and Portfolios" herein.
NET ASSET VALUE
The net asset value per share of each Fund is calculated on each day on which
the New York Stock Exchange Inc. (the "NYSE") is open (each such day being a
"Valuation Day"). The NYSE is currently open on each day, Monday through
Friday, except: (a) January 1st, Presidents' Day (the third Monday in
February), Good Friday, Memorial Day (the last Monday in May), July 4th, Labor
Day (the first Monday in September), Thanksgiving Day (the last Thursday in
November) and December 25th; and (b) the preceding Friday or the subsequent
Monday when one of the calendar-determined holidays falls on a Saturday or
Sunday, respectively.
The net asset value per share of each Fund is calculated on each Valuation Day
as of the close of regular trading on the NYSE (the "Valuation Time"), which
is currently 4:00 p.m., New York time. The net asset value per share of each
Fund is computed by dividing the value of the Fund's Assets (i.e., the value
of its investment in the Portfolio and other assets), less all liabilities, by
the total number of its shares outstanding. Each Portfolio's securities and
other assets are valued on the basis of market quotations or, if market
quotations are not readily available, by a method which that Portfolio's Board
of Trustees believes accurately reflects fair value.
PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
The Trust accepts purchase orders for shares of each Fund at the net asset
value per share of that Fund next determined on each Valuation Day. See "Net
Asset Value" above. There is no sales charge on the purchase of shares, but
costs of distributing shares of each Fund may be reimbursed from its assets,
as described herein. Excluding retirement plans, the minimum initial
investment in the Trust is $20,000, which may be allocated in amounts not less
than $5,000 per fund in certain funds in the BT Family of Funds. The
subsequent minimum investment in the Fund is $5,000 (excluding retirement
plans). Service Agents may impose initial and subsequent investment minimums
that differ from these amounts. Shares of each Fund may be purchased in only
those states where they may be lawfully sold.
Purchase orders for shares of a Fund that are received by a Service Agent and
transmitted to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent"), prior to the Valuation Time (currently 4:00 p.m., New York time) on
any Valuation Day will be effective at that day's Valuation Time. The Trust
and Signature reserve the right to reject any purchase order.
Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to
transmit to the Transfer Agent purchase and redemption orders and to transmit
to Bankers Trust as the Trust's custodian (the "Custodian") purchase payments
on behalf of its customers in a timely manner, and a shareholder must settle
with the Service Agent his or her entitlement to an effective purchase or
redemption order as of a particular time. Because Bankers Trust is the
Custodian and Transfer Agent of the Trust, funds may be transferred directly
from or to a customer's account with Bankers Trust to or from the Fund without
incurring the additional costs or delays associated with the wiring of federal
funds.
Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.
Systematic Investment Plan. The Fund may offer shareholders a systematic
investment plan under which shareholders may authorize some Service Agents to
place a purchase order each month or quarter for Fund shares in an amount not
less than $100. For further information regarding the systematic investment
plan, shareholders should contact their Service Agent.
REDEMPTION OF SHARES
Shareholders may redeem shares at the net asset value per share next
determined on each Valuation Day. Redemption requests should be transmitted by
customers in accordance with procedures established by the Transfer Agent and
the shareholder's Service Agent. Redemption requests for shares of a Fund
received by the Service Agent and transmitted to the Transfer Agent prior to
the Valuation Time (currently
4:00 p.m., New York time) on each Valuation Day will be effective at that
day's Valuation Time and the redemption proceeds normally will be delivered to
the shareholder's account with the Service Agent on the next day, but in any
event within seven calendar days following receipt of the request.
Service Agents may allow redemptions or exchanges by telephone and may also
disclaim liability for following instructions communicated by telephone that
the Service Agent reasonably believes to be genuine. The Service Agent must
provide the investor with an opportunity to choose whether or not to utilize
the telephone redemption or exchange privilege. The Service Agent must employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. If the Service Agent does not do so, it may be liable for any
losses due to unauthorized or fraudulent instructions. Such procedures may
include, among others, requiring some form of personal identification prior to
acting upon instructions received by telephone, providing written confirmation
of such transactions and/or tape recording of telephone instructions.
Redemption orders are processed without charge by the Trust. A Service Agent
may on at least 30 days' notice involuntarily redeem a shareholder's account
with a Fund having a current value of less than $5,000 (excluding retirement
plans), but not if an account is below $5,000 due to a change in market value.
Automatic Cash Withdrawal Plan. The Funds may offer shareholders an automatic
cash withdrawal plan, under which shareholders who own shares of the Funds may
elect to receive periodic cash payments. Retirement plan accounts are eligible
for automatic cash withdrawal plans only where the shareholder is eligible to
receive qualified distributions. For further information regarding the
automatic cash withdrawal plan, shareholders should contact their Service
Agent.
EXCHANGE PRIVILEGE
Shareholders may exchange their shares for shares of certain other funds in
the BT Family of Funds registered in their state. The Funds reserve the right
to terminate or modify the exchange privilege in the future. To make an
exchange, follow the procedures indicated in "Purchase of Shares" and
"Redemption of Shares" in that fund's prospectus. Before making an exchange,
please note the following:
o Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.
o Complete and sign an application, taking care to register your new account
in the same name, address, and taxpayer identification number as your
existing account(s).
o Each exchange represents the sale of shares of one fund and the purchase of
shares of another, which may produce a gain or loss for tax purposes. Your
Service Agent will send a written confirmation of each exchange transaction.
TAX-SAVING RETIREMENT PLANS
Retirement plans offer significant tax savings and are available to
individuals, partnerships, small businesses, corporations, nonprofit
organizations and other institutions. Contact your Service Agent or Bankers
Trust for further information. Bankers Trust can set up your new account in
the Fund under a number of tax-sheltered plans. These plans contain special
tax advantages and let you invest for retirement while sheltering your
investment income from current taxes. Minimums may differ from those listed
elsewhere in the Prospectus.
o Individual Retirement Accounts (IRAs): personal savings plans that offer tax
advantages for individuals to set aside money for retirement and allow new
contributions of $2,000 per tax year.
o Rollover IRAs: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.
o Simplified Employee Pension Plans (SEP): a relatively easy and inexpensive
alternative to retirement planning for sole proprietors, partnerships and
corporations. Under a SEP, employers make tax-deductible contributions to
their own and to eligible employees' IRA accounts. Employee contributions
are available through a "Salary Deferral" SEP for businesses with fewer than
25 eligible employees.
o Keogh Plans: defined contribution plans available to individuals with self-
employed income and nonincorporated businesses such as sole proprietors,
professionals and partnerships. Contributions are tax-deductible to the
employer and earnings are tax-sheltered until distribution.
o Corporate Profit-Sharing and Money-Purchase Plans: defined contribution
plans available to corporations to benefit their employees by making
contributions on their behalf and in some cases permitting their employees
to make contributions.
o 401(k) Programs: defined contribution plans available to corporations
allowing tax-deductible employer contributions and permitting employees to
contribute a percentage of their wages on a tax-deferred basis.
o 403(b) Custodian Accounts: defined contribution plans open to employees of
most nonprofit organizations and educational institutions.
o Deferred Benefit Plans: plan sponsors may invest all or part of their
pension assets in the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Distributions. Each Fund distributes substantially all of its net investment
income and capital gains to shareholders each year. Income dividends are
distributed on the first business day in April, July and October. In December,
another income dividend will be distributed plus any net capital gains. Unless
a shareholder instructs the Trust to pay such dividends and distributions in
cash, they will be automatically reinvested in additional shares of the Fund.
Federal Taxes. Distributions from the Funds' income and short-term capital
gains are taxed as dividends, and long-term capital gain distributions are
taxed as long-term capital gains. The Funds' distributions are taxable when
they are paid, whether you take them in cash or reinvest them in additional
shares. Distributions declared to shareholders of record in November and
December and paid in January are taxable as if paid on December 31. Each Fund
will send each shareholder a tax statement by January 31 showing the tax
status of the distributions received in the past year.
Capital Gains. You may realize a capital gain or loss when you redeem (sell)
or exchange shares. Because the tax treatment also depends on your purchase
price and your personal tax position, you should keep your regular account
statements to use in determining your tax.
"Buying a Dividend." On the ex-date for a distribution from income and/or
capital gains, each Fund's share value is reduced by the amount of the
distribution. If you buy shares just before the ex-date ("buying a dividend"),
you will pay the full price for the shares and then receive a portion of the
price back as a taxable distribution.
Other Tax Information. In addition to Federal taxes, you may be subject to
state or local taxes on your investment, depending on the laws in your area.
Income received by the Portfolios from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.
PERFORMANCE INFORMATION AND REPORTS
The Funds' performance may be used from time to time in advertisements,
shareholder reports or other communications to shareholders or prospective
shareholders. Performance information may include each Fund's investment
results and/or comparisons of its investment results to the Lipper Flexible
Funds Average, Standard and Poor's 500 Composite Stock Price Index, Salomon
Broad Investment Grade Bond Index, T-Bill 3 Month Index from Lipper Analytical
Services, Inc. and various unmanaged indices (or a blended rate of several of
such indices) or results of other mutual funds or investment or savings
vehicles. Each Fund's investment results as used in such communications will
be calculated on a yield or total rate of return basis in the manner set forth
below. From time to time, fund rankings may be quoted from various sources
such as Lipper Analytical Services, Inc., Value Line and Morningstar, Inc.
The Trust may provide period and average annualized "total return" quotations
for the Funds. The "total return" refers to the change in the value of an
investment in each Fund over a stated period based on any change in net asset
value per share and including the value of any shares purchasable with any
dividends or capital gains distributed during such period. Period total return
may be annualized. An annualized total return is a compounded total return
which assumes that the period total return is generated over a one-year
period, and that all dividends and capital gain distributions are reinvested.
An annualized total return will be higher than a period total return if the
period is shorter than one year, because of the compounding effect.
The Trust may provide annualized "yield" quotations for the Funds. The "yield"
of a Fund refers to the income generated by an investment in the Fund over a
30-day or one-month period (which period shall be stated in any such
advertisement or communications). This income is then annualized; that is, the
amount generated by the investment over the period is assumed to be generated
over a one-year period and is shown as a percentage of investment.
Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of a Fund will vary depending upon
interest rates, the current market value of the securities held by the
corresponding Portfolio and changes in the Fund's expenses. In addition,
during certain periods for which total return or yield quotations may be
provided, Bankers Trust, as Adviser, Service Agent or Administrator, or
Signature, as Distributor, may have voluntarily agreed to waive portions of
their fees on a month-to-month basis. Such waivers will have the effect of
increasing a Fund's net income (and therefore its total return or yield)
during the period such waivers are in effect.
Shareholders will receive financial reports semi-annually that include the
Portfolios' financial statements, including listings of investment securities
held by the Portfolios at those dates. Annual reports are audited by
independent accountants.
MANAGEMENT OF THE TRUST AND PORTFOLIOS
BOARD OF TRUSTEES
The affairs of the Trust and each Portfolio are managed under the supervision
of their respective Boards of Trustees. By virtue of the responsibilities
assumed by Bankers Trust, as the Administrator of the Trust and each
Portfolio, neither the Trust nor any Portfolio requires employees other than
its officers. None of the Trust's or any Portfolio's officers devotes full
time to the affairs of the Trust or the respective Portfolio.
The Trustees of the Trust who are not "interested persons," as defined in the
1940 Act, of the Trust (the "Independent Trustees") are not the same as the
Independent Trustees of the Portfolios. For more information with respect to
the Trustees of the Trust and the Portfolios, see "Management of the Trust and
Portfolios" in the Statement of Additional Information.
INVESTMENT ADVISER
The Trust has not retained the services of an investment adviser since the
Trust seeks to achieve the investment objective of each Fund by investing all
the Assets of each Fund in the corresponding Portfolio. Each Portfolio has
retained the services of Bankers Trust, as investment adviser. Mr. Philip J.
Green, Vice President of Bankers Trust, is responsible for the day-to-day
management of each Portfolio. Mr. Green has been employed by Bankers Trust
since June, 1985 and has managed the Portfolios' assets since January, 1995.
Prior to managing the Portfolios, Mr. Green was responsible for the management
of other non-mutual fund related portfolios at Bankers Trust.
Bankers Trust, a New York banking corporation with executive offices at 280
Park Avenue, New York, New York 10017, is a wholly owned subsidiary of Bankers
Trust New York Corporation. Bankers Trust conducts a variety of general
banking and trust activities and is a major wholesale supplier of financial
services to the international and domestic institutional markets. As of
December 31, 1994, Bankers Trust New York Corporation was the seventh largest
bank holding company in the United States with total assets of approximately
$97 billion. Bankers Trust is a worldwide merchant bank dedicated to servicing
the needs of corporations, governments, financial institutions and private
clients through a global network of 129 offices in 38 countries. Investment
management is a core business of Bankers Trust, built on a tradition of
excellence from its roots as a trust bank founded in 1903. The scope of
Bankers Trust's investment management capability is unique due to its
leadership positions in both active and passive quantitative management and
its presence in major equity and fixed income markets around the world.
Bankers Trust is one of the nation's largest and most experienced investment
managers, with over $185 billion in assets under management. Of that total,
approximately $2.1 billion are in tactical asset allocation funds. This makes
Bankers Trust one of the nation's leading managers of tactical asset
allocation funds.
Bankers Trust has more than 50 years of experience managing retirement assets
for the nation's largest corporations and institutions. In the past, these
clients have been serviced through separate account and commingled fund
structures. Now, the BT Family of Funds brings Bankers Trust's extensive
investment management expertise -- once available to only the largest
institutions in the U.S. -- to individual investors. Bankers Trust's officers
have had extensive experience in managing investment portfolios having
objectives similar to those of the Portfolios. Bankers Trust has been advised
by its counsel that, in counsel's opinion, Bankers Trust currently may perform
the services for the Trust and the Portfolios described in this Prospectus and
the Statement of Additional Information without violation of the Glass-
Steagall Act or other applicable banking laws or regulations. State laws on
this issue may differ from the interpretations of relevant Federal law and
banks and financial institutions may be required to register as dealers
pursuant to state securities law.
Bankers Trust, subject to the supervision and direction of the Board of
Trustees of the respective Portfolio, manages each Portfolio in accordance
with that Portfolio's investment objective and stated investment policies,
makes investment decisions for each Portfolio, places orders to purchase and
sell securities and other financial instruments on behalf of each Portfolio
and employs professional investment managers and securities analysts who
provide research services to each Portfolio. Bankers Trust may utilize the
expertise of any of its worldwide subsidiaries and affiliates to assist it in
its role as investment adviser. All orders for investment transactions on
behalf of each Portfolio are placed by Bankers Trust with broker-dealers and
other financial intermediaries that it selects, including those affiliated
with Bankers Trust. A Bankers Trust affiliate will be used in connection with
a purchase or sale of an investment for each Portfolio only if Bankers Trust
believes that the affiliate's charge for the transaction does not exceed usual
and customary levels. Each Portfolio will not invest in obligations for which
Bankers Trust or any of its affiliates is the ultimate obligor or accepting
bank. Each Portfolio may, however, invest in the obligations of correspondents
or customers of Bankers Trust.
Under its Investment Advisory Agreement, Bankers Trust receives a fee from
each Portfolio computed daily and paid monthly at the annual rate of 0.65% of
the average daily net assets of the Portfolio.
ADMINISTRATOR
Under its Administration and Services Agreement with the Trust, Bankers Trust
calculates the net asset value of each Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of
the Trust. The Administration and Services Agreement provides for the Trust to
pay Bankers Trust a fee computed daily and paid monthly at the annual rate of
0.65% of the average daily net assets of each Fund.
Under an Administration and Services Agreement with each Portfolio, Bankers
Trust calculates the value of the assets of the Portfolios and generally
assists the Board of Trustees of the Portfolios in all aspects of the
administration and operation of the Portfolios. Each Administration and
Services Agreement provides for the respective Portfolio to pay Bankers Trust
a fee computed daily and paid monthly at the rate of 0.10% of the average
daily net assets of that Portfolio. Under each Administration and Services
Agreement, Bankers Trust may delegate one or more of its responsibilities to
others, including Signature, at Bankers Trust's expense. For more information,
see the Statement of Additional Information.
DISTRIBUTOR
Under its Distribution Agreement with the Trust, Signature, as Distributor,
serves as the Trust's principal underwriter on a best efforts basis. In
addition, Signature provides the Trust with office facilities. Signature is a
wholly owned subsidiary of Signature Financial Group, Inc. ("SFG"). SFG and
its affiliates currently provide administration and distribution services for
other registered investment companies. The principal business address of SFG
and Signature is 6 St. James Avenue, Boston, Massachusetts 02116.
Pursuant to the terms of the Trust's Plan of Distribution pursuant to Rule
12b-1 under the 1940 Act (the "Plan"), Signature may seek reimbursement in an
amount not exceeding 0.20% of each Fund's average daily net assets annually
for expenses incurred in connection with any activities primarily intended to
result in the sale of the Funds' shares, including, but not limited to:
compensation to and expenses (including overhead and telephone expenses) of
account executives or other employees of Signature who, as their primary
activity, engage in or support the distribution of shares; printing the
prospectuses, statements of additional information and reports for other than
existing Fund shareholders in amounts in excess of that typically used in
connection with the distribution of shares of the Funds; costs of placing
advertising in various media; services of parties other than Signature or its
affiliates in formulating sales literature; and typesetting, printing and
distribution of sales literature. All costs and expenses in connection with
implementing and operating the Plan will be paid by the respective Fund,
subject to the 0.20% of net assets limitation. All costs and expenses
associated with preparing the prospectuses and statements of additional
information and in connection with printing them for and distributing them to
existing shareholders and regulatory authorities, which costs and expenses
would not be considered distribution expenses for purposes of the Plan, will
also be paid by the respective Fund. To the extent expenses of Signature under
the Plan in any fiscal year of the Trust exceed amounts payable under the Plan
during that year, those expenses will not be reimbursed in any succeeding
fiscal year. Expenses incurred in connection with distribution activities will
be identified to the Fund or the other series of the Trust involved, although
it is anticipated that some activities may be conducted on a Trust-wide basis,
with the result that those activities will not be identifiable to any
particular series. In the latter case, expenses will be allocated among the
series of the Trust on the basis of their relative net assets. It is not
expected that any payments will be made under the Plan in the foreseeable
future.
SERVICE AGENT
All shareholders must be represented by a Service Agent. Bankers Trust acts as
a Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Funds for such
shareholder services. The service fees of any other Service Agents, including
broker-dealers, will be paid by Bankers Trust from its fees. The services
provided by a Service Agent may include establishing and maintaining
shareholder accounts, processing purchase and redemption transactions,
arranging for bank wires, performing shareholder sub-accounting, answering
client inquiries regarding the Trust, assisting clients in changing dividend
options, account designations and addresses, providing periodic statements
showing the client's account balance, transmitting proxy statements, periodic
reports, updated prospectuses and other communications to shareholders and,
with respect to meetings of shareholders, collecting, tabulating and
forwarding to the Trust executed proxies and obtaining such other information
and performing such other services as the Administrator or the Service Agent's
clients may reasonably request and agree upon with the Service Agent. Service
Agents may separately charge their clients additional fees only to cover
provision of additional or more comprehensive services not already provided
under the Administration and Services Agreement with Bankers Trust, or of the
type or scope not generally offered by a mutual fund, such as cash management
services or enhanced retirement or trust reporting. Each Service Agent has
agreed to transmit to shareholders who are its customers appropriate
disclosures of any fees that it may charge them directly.
CUSTODIAN AND TRANSFER AGENT
Bankers Trust acts as Custodian of the assets of the Trust and each Portfolio
and serves as the Transfer Agent for the Trust and each Portfolio under the
Administration and Services Agreement with the Trust and each Portfolio.
ORGANIZATION OF THE TRUST
The Trust was organized on July 21, 1986 under the laws of the Commonwealth of
Massachusetts. Each Fund is a separate series of the Trust and was established
and designated on August 12, 1992. The Trust offers shares of beneficial
interest of separate series, par value $0.001 per share. The shares of the
other series of the Trust are offered through separate prospectuses. No series
of shares has any preference over any other series.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
When matters are submitted for shareholder vote, shareholders of each Fund
will have one vote for each full share held and proportionate, fractional
votes for fractional shares held. A separate vote of a Fund is required on any
matter affecting that Fund on which shareholders are entitled to vote.
Shareholders of a Fund are not entitled to vote on Trust matters that do not
affect that Fund. There normally will be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a
majority of Trustees holding office have been elected by shareholders, at
which time the Trustees then in office will call a shareholders' meeting for
the election of Trustees. Any Trustee may be removed from office upon the vote
of shareholders holding at least two-thirds of the Trust's outstanding shares
at a meeting called for that purpose. The Trustees are required to call such a
meeting upon the written request of shareholders holding at least 10% of the
Trust's outstanding shares.
Asset Management Portfolio II and Asset Management Portfolio III are each a
series of BT Investment Portfolios, an open-end management investment company.
BT Investment Portfolios and Asset Management Portfolio are each organized as
trusts under the laws of the State of New York. Each Portfolio's Declaration
of Trust provides that the corresponding Fund and other entities investing in
the Portfolio (e.g., other investment companies, insurance company separate
accounts and common and commingled trust funds) will each be liable for all
obligations of the Portfolio. However, the risk of a Fund incurring financial
loss on account of such liability is limited to circumstances in which both
inadequate insurance existed and the corresponding Portfolio itself was unable
to meet its obligations. Accordingly, the Trustees of the Trust believe that
neither the Funds nor their shareholders will be adversely affected by reason
of the Funds investing in the corresponding Portfolios. The interest in BT
Investment Portfolios are divided into separate series, such as Asset
Management Portfolio II and Asset Management Portfolio III. No series of BT
Investment Portfolios has any preference over any other series.
Each series of the Trust will not be involved in any vote involving a
Portfolio in which it does not invest its Assets. Shareholders of all the
series of the Trust will, however, vote together to elect Trustees of the
Trust and for certain other matters. Under certain circumstances, the
shareholders of one or more series could control the outcome of these votes.
The series of BT Investment Portfolios will vote separately or together in the
same manner as the series of the Trust. Under certain circumstances, the
investors in one or more series of BT Investment Portfolios could control the
outcome of these votes.
EXPENSES OF THE TRUST
Each Fund bears its own expenses. Operating expenses for each Fund generally
consist of all costs not specifically borne by Bankers Trust or Signature,
including administration and service fees, fees for necessary professional
services, amortization of organizational expenses, and costs associated with
regulatory compliance and maintaining legal existence and shareholder
relations. Bankers Trust and Signature have agreed to reimburse each Fund to
the extent required by applicable state law for certain expenses that are
described in the Statement of Additional Information. Each Portfolio bears its
own expenses. Operating expenses for each Portfolio generally consist of all
costs not specifically borne by Bankers Trust or Signature, including
investment advisory and administration and services fees, fees for necessary
professional services, the costs associated with regulatory compliance and
maintaining legal existence and investor relations.
ADDITIONAL INFORMATION
When-Issued and Delayed Delivery Securities. Each Portfolio may buy and sell
securities on a when-issued or delayed-delivery basis. These transactions
involve a commitment by the Portfolio to buy or sell securities at a set
price, with payment and delivery taking place at a future date. When the
Portfolio agrees to purchase a security on a when-issued or delayed-delivery
basis, it sets aside liquid securities in a segregated custodial account to
equal the payment that will be due. Purchasing securities in this manner may
cause greater fluctuations in the Portfolio's share price.
Short Sales. Each Portfolio may engage in short sales with respect to
securities that it owns or has the right to obtain (for example, through
conversion of a convertible bond). These transactions, known as short sales
"against the box," allow the Portfolio to hedge against price fluctuations by
locking in a sale price for securities it does not wish to sell immediately.
Indexed Securities. Each Portfolio may invest in indexed securities whose
value depends on the price of foreign currencies, securities indexes or other
financial values or statistics. Examples include debt securities whose value
at maturity is determined by reference to the relative prices of various
currencies or to the price of a stock index. These securities may be
positively or negatively indexed; that is, their value may increase or
decrease if the underlying instrument appreciates.
Securities Lending. Each Portfolio is permitted to lend up to 30% of the total
value of its securities. These loans must be secured continuously by cash or
equivalent collateral or by a letter of credit at least equal to the market
value of the securities loaned plus accrued income. By lending its securities,
the Portfolio can increase its income by continuing to receive income on the
loaned securities as well as by the opportunity to receive interest on the
collateral. Any gain or loss in the market price of the borrowed securities
which occurs during the term of the loan inures to the Portfolio and its
investors.
Repurchase Agreements. Each Portfolio may invest in repurchase agreements. In
a repurchase agreement the Portfolio buys a security and simultaneously agrees
to sell it back at a higher price. In the event of the bankruptcy of the other
party to either a repurchase agreement or a securities loan, a Portfolio could
experience delays in recovering either its cash or the securities it lent. To
the extent that, in the meantime, the value of the securities repurchased had
decreased or the value of the securities lent had increased, the Portfolio
could experience a loss. In all cases, Bankers Trust must find the
creditworthiness of the other party to the transaction satisfactory. A
repurchase agreement is considered a collateralized loan under the 1940 Act.
Rule 144A Securities. Each Portfolio may purchase securities in the United
States that are not registered for sale under Federal securities laws but
which can be resold to institutions under the Securities and Exchange
Commission's (the "SEC") Rule 144A. Provided that a dealer or institutional
trading market in such securities exists, these restricted securities are
treated as exempt from each Portfolio's 15% limit on illiquid securities.
Under the supervision of the Board of Trustees of each Portfolio, Bankers
Trust determines the liquidity of restricted securities and, through reports
from Bankers Trust, that Board will monitor trading activity in restricted
securities. Because Rule 144A is relatively new, it is not possible to predict
how these markets will develop. If institutional trading in restricted
securities were to decline, the liquidity of each Portfolio could be adversely
affected.
Zero Coupon Debt Securities. Zero coupon debt securities do not make regular
interest payments. Instead they are sold at a deep discount from their face
value. Because a zero coupon bond does not pay current income, its price can
be very volatile when interest rates change. In calculating its dividends,
each Fund takes into account as income a portion of the difference between a
zero coupon bond's purchase price and its face value.
Government Securities. Government securities may or may not be backed by the
full faith and credit of the U.S. Government. U.S. Treasury bonds, notes and
bills and certain agency securities, such as those issued by the Federal
Housing Administration, are backed by the full faith and credit of the U.S.
Government and are the highest quality government securities. Each Portfolio
may also invest a substantial portion of its portfolio in securities issued by
government agencies or instrumentalities (such as executive departments of the
U.S. Government or independent Federal organizations supervised by Congress),
which may have different degrees of government backing but which are not
backed by the full faith and credit of the U.S. Government. There is no
guarantee that the government will support these types of securities, and
therefore they involve more risk than other government obligations.
Mortgage-Backed Securities. Mortgage-backed securities are securities
representing interests in a pool of mortgages. Principal and interest payments
made on the mortgages in the underlying mortgage pool are passed through to
the investor. Unscheduled prepayments of principal shorten the securities'
weighted average life and may lower their total return. (When a mortgage in
the underlying pool is prepaid, an unscheduled principal prepayment is passed
through to the investor. This principal is returned to the investor at par. As
a result, if a mortgage security were trading at a premium, its total return
would be lowered by prepayments, and if a mortgage security were trading at a
discount, its total return would be increased by prepayments.) The value of
these securities also may change because of changes in the market's perception
of the creditworthiness of the Federal agency that issued them. In addition,
the mortgage securities market in general may be adversely affected by changes
in governmental regulation or tax policies.
Collateralized Mortgage Obligations ("CMOs"). CMOs are pay-through securities
collateralized by mortgages or mortgage-backed securities. CMOs are issued in
classes and series that have different maturities and often are retired in
sequence. CMOs may be issued by governmental or non-governmental entities such
as banks and other mortgage lenders. Non-government securities may offer a
higher yield but also may be subject to greater price fluctuation than
government securities.
Asset-Backed Securities. Asset-backed securities consist of undivided
fractional interests in pools of consumer loans (unrelated to mortgage loans)
held in a trust. Payments of principal and interest are passed through to
certificateholders and are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guarantee or
senior/subordination. The degree of credit enhancement varies, but generally
amounts to only a fraction of the asset-backed security's par value until
exhausted. If the credit enhancement is exhausted, certificateholders may
experience losses or delays in payment if the required payments of principal
and interest are not made to the trust with respect to the underlying loans.
The value of these securities also may change because of changes in the
market's perception of the creditworthiness of the servicing agent for the
loan pool, the originator of the loans or the financial institution providing
the credit enhancement. Asset-backed securities are ultimately dependent upon
payment of consumer loans by individuals, and the certificateholder generally
has no recourse to the entity that originated the loans. The underlying loans
are subject to prepayments which shorten the securities' weighted average life
and may lower their return. (As prepayments flow through at par, total returns
would be affected by the prepayments: if a security were trading at a premium,
its total return would be lowered by prepayments, and if a security were
trading at a discount, its total return would be increased by prepayments.)
Foreign Investments. Each Portfolio may invest in securities of foreign
issuers directly or in the form of American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs") or other similar securities representing
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities they represent. ADRs are
receipts typically issued by a U.S. bank or trust company evidencing ownership
of the underlying securities. EDRs are receipts issued by a European financial
institution evidencing a similar arrangement. Generally, ADRs, in registered
form, are designed for use in the U.S. securities markets, and EDRs, in bearer
form, are designed for use in European securities markets.
With respect to certain countries in which capital markets are either less
developed or not easily accessed, investments by each Portfolio may be made
through investment in other investment companies that in turn are authorized
to invest in the securities of such countries. Investment in other investment
companies is limited in amount by the 1940 Act, will involve the indirect
payment of a portion of the expenses, including advisory fees, of such other
investment companies and may result in a duplication of fees and expenses.
Options on Stocks. Each Portfolio may write and purchase put and call options
on stocks. A call option gives the purchaser of the option the right to buy,
and obligates the writer to sell, the underlying stock at the exercise price
at any time during the option period. Similarly, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy,
the underlying stock at the exercise price at any time during the option
period. A covered call option, which is a call option with respect to which a
Portfolio owns the underlying stock, sold by the Portfolio exposes the
Portfolio during the term of the option to possible loss of opportunity to
realize appreciation in the market price of the underlying stock or to
possible continued holding of a stock which might otherwise have been sold to
protect against depreciation in the market price of the stock. A covered put
option sold by a Portfolio exposes the Portfolio during the term of the option
to a decline in price of the underlying stock. A put option sold by a
Portfolio is covered when, among other things, cash or liquid securities are
placed in a segregated account to fulfill the obligations undertaken.
To close out a position when writing covered options, each Portfolio may make
a "closing purchase transaction," which involves purchasing an option on the
same stock with the same exercise price and expiration date as the option
which it has previously written on the stock. A Portfolio will realize a
profit or loss for a closing purchase transaction if the amount paid to
purchase an option is less or more, as the case may be, than the amount
received from the sale thereof. To close out a position as a purchaser of an
option, each Portfolio may make a "closing sale transaction," which involves
liquidating the Portfolio's position by selling the option previously
purchased.
Each Portfolio intends to treat over-the-counter options ("OTC Options")
purchased and the assets used to "cover" OTC Options written as not readily
marketable and therefore subject to the limitations described in "Investment
Restrictions" in the Statement of Additional Information.
Options on Stock Indexes. Each Portfolio may purchase and write put and call
options on stock indexes listed on stock exchanges. A stock index fluctuates
with changes in the market values of the stocks included in the index.
Options on stock indexes are generally similar to options on stock except that
the delivery requirements are different. Instead of giving the right to take
or make delivery of stock at a specified price, an option on a stock index
gives the holder the right to receive a cash "exercise settlement amount"
equal to (a) the amount, if any, by which the fixed exercise price of the
option exceeds (in the case of a put) or is less than (in the case of a call)
the closing value of the underlying index on the date of exercise, multiplied
by (b) a fixed "index multiplier." Receipt of this cash amount will depend
upon the closing level of the stock index upon which the option is based being
greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. The amount of cash received will be equal to
such difference between the closing price of the index and the exercise price
of the option expressed in dollars times a specified multiple. The writer of
the option is obligated, in return for the premium received, to make delivery
of this amount. The writer may offset its position in stock index options
prior to expiration by entering into a closing transaction on an exchange or
the option may expire unexercised.
Because the value of an index option depends upon movements in the level of
the index rather than the price of a particular stock, whether a Portfolio
will realize a gain or loss from the purchase or writing of options on an
index depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market
segment, rather than movements in the price of a particular stock.
Accordingly, successful use by a Portfolio of options on stock indexes will be
subject to Bankers Trust's ability to predict correctly movements in the
direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price
of individual stocks.
Futures Contracts on Securities Indexes. Each Portfolio may enter into
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of securities ("Futures Contracts").
This investment technique may be used to hedge against anticipated future
change in general market prices which otherwise might either adversely affect
the value of securities held by the Portfolio or adversely affect the prices
of securities which are intended to be purchased at a later date for the
Portfolio or as an efficient means of managing allocations between asset
classes. A Futures Contract may also be entered into to close out or offset an
existing futures position.
When used for hedging purposes, a Futures Contracts involves the establishment
of a position which will move in a direction opposite to that of the
investment being hedged. If these hedging transactions are successful, the
futures positions taken for a Portfolio will rise in value by an amount which
approximately offsets the decline in value of the portion of the Portfolio's
investments that are being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not
be achieved or a loss may be realized.
Futures Contracts do involve certain risks. These risks could include a lack
of correlation between the Futures Contract and the corresponding securities
market, a potential lack of liquidity in the secondary market and incorrect
assessments of market trends which may result in poorer overall performance
than if a Futures Contract had not been entered into.
Brokerage costs will be incurred and "margin" will be required to be posted
and maintained as a good-faith deposit against performance of obligations
under Futures Contracts written for a Portfolio. Each Portfolio may not
purchase or sell a Futures Contract if immediately thereafter its margin
deposits on its outstanding Futures Contracts (other than Futures Contracts
entered into for bona fide hedging purposes) would exceed 5% of the market
value of the Portfolio's total assets.
Options on Futures Contracts. Each Portfolio may invest in options on such
Futures Contracts for similar purposes.
Foreign Currency Exchange Transactions. Because each Portfolio buys and sells
securities denominated in currencies other than the U.S. dollar and receives
interest, dividends and sale proceeds in currencies other than the U.S.
dollar, the Portfolios from time to time may enter into foreign currency
exchange transactions to convert to and from different foreign currencies and
to convert foreign currencies to and from the U.S. dollar. Each Portfolio
either enters into these transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or uses forward
contracts to purchase or sell foreign currencies.
A forward foreign currency exchange contract is an obligation by a Portfolio
to purchase or sell a specific currency at a future date, which may be any
fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These
contracts are transferable in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A
forward foreign currency exchange contract generally has no deposit
requirement and is traded at a net price without commission. Each Portfolio
maintains with its custodian a segregated account of high grade liquid assets
in an amount at least equal to its obligations under each forward foreign
currency exchange contract. Neither spot transactions nor forward foreign
currency exchange contracts eliminate fluctuations in the prices of a
Portfolio's securities or in foreign exchange rates, or prevent loss if the
prices of these securities should decline.
Each Portfolio may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes
in foreign currency exchange rates that would adversely affect a portfolio
position or an anticipated investment position. Since consideration of the
prospect for currency parities will be incorporated into Bankers Trust's long-
term investment decisions, each Portfolio will not routinely enter into
foreign currency hedging transactions with respect to security transactions;
however, Bankers Trust believes that it is important to have the flexibility
to enter into foreign currency hedging transactions when it determines that
the transactions would be in each Portfolio's best interest. Although these
transactions tend to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time they tend to limit any potential gain
that might be realized should the value of the hedged currency increase. The
precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of such securities between the date the forward
contract is entered into and the date it matures. The projection of currency
market movements is extremely difficult, and the successful execution of a
hedging strategy is highly uncertain.
Options on Foreign Currencies. Each Portfolio may write covered put and call
options and purchase put and call options on foreign currencies for the
purpose of protecting against declines in the dollar value of portfolio
securities and against increases in the dollar cost of securities to be
acquired. Each Portfolio may use options on currency to cross-hedge, which
involves writing or purchasing options on one currency to hedge against
changes in exchange rates for a different, but related currency. As with other
types of options, however, the writing of an option on foreign currency will
constitute only a partial hedge up to the amount of the premium received, and
each Portfolio could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may be used to hedge against fluctuations in
exchange rates although, in the event of exchange rate movements adverse to a
Portfolio's position, it may forfeit the entire amount of the premium plus
related transaction costs. In addition each Portfolio may purchase call
options on currency when the Adviser anticipates that the currency will
appreciate in value.
There is no assurance that a liquid secondary market on an options exchange
will exist for any particular option, or at any particular time. If a
Portfolio is unable to effect a closing purchase transaction with respect to
covered options it has written, the Portfolio will not be able to sell the
underlying currency or dispose of assets held in a segregated account until
the options expire or are exercised. Similarly, if a Portfolio is unable to
effect a closing sale transaction with respect to options it has purchased, it
would have to exercise the options in order to realize any profit and will
incur transaction costs upon the purchase or sale of underlying currency. Each
Portfolio pays brokerage commissions or spreads in connection with its options
transactions.
As in the case of forward contracts, certain options on foreign currencies are
traded over-the-counter and involve liquidity and credit risks which may not
be present in the case of exchange-traded currency options. Each Portfolio's
ability to terminate over-the-counter options ("OTC Options") will be more
limited than with exchange-traded options. It is also possible that broker-
dealers participating in OTC Options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position,
each Portfolio will treat purchased OTC Options and assets used to cover
written OTC Options as illiquid securities. With respect to options written
with primary dealers in U.S. Government securities pursuant to an agreement
requiring a closing purchase transaction at a formula price, the amount of
illiquid securities may be calculated with reference to the repurchase
formula.
All options that each Portfolio writes will be covered under applicable
requirements of the SEC. Each Portfolio will write and purchase options only
to the extent permitted by the policies of state securities authorities in
states where shares of the respective Fund are qualified for offer and sale.
There can be no assurance that the use of these portfolio strategies will be
successful.
Asset Coverage. To assure that each of the Portfolio's use of futures and
related options, as well as when-issued and delayed-delivery securities and
foreign currency exchange transactions, are not used to achieve investment
leverage, each Portfolio will cover such transactions, as required under
applicable interpretations of the SEC, either by owning the underlying
securities or by establishing a segregated account with the Portfolio's
custodian containing high grade liquid debt securities in an amount at all
times equal to or exceeding the Portfolio's commitment with respect to these
instruments or contracts.
<PAGE>
INVESTMENT ADVISER OF EACH PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY
DISTRIBUTOR
SIGNATURE BROKER-DEALER SERVICES, INC.
CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
COUNSEL
WILLKIE FARR & GALLAGHER
..............
No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectuses, its
Statements of Additional Information or the Trust's official sales literature
in connection with the offering of the Trust's shares and, if given or made,
such other information or representations must not be relied on as having been
authorized by the Trust. This Prospectus does not constitute an offer in any
state in which, or to any person to whom, such offer may not lawfully be made.
..............
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
August 1, 1995
BT INVESTMENT FUNDS
o BT Investment Lifecycle Short Range Fund
o BT Investment Lifecycle Mid Range Fund
o BT Investment Lifecycle Long Range Fund
BT Investment Funds (the "Trust") is comprised of several funds. The shares
of the following funds the BT Investment Lifecycle Short Range Fund, BT
Investment Lifecycle Mid Range Fund and BT Investment Lifecycle Long Range Fund
(each, a "Fund") are described herein.
Table of Contents
Investment Objectives, Policies and Restrictions . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . . .
Valuation of Securities; Redemptions and Purchases in Kind . . . .
Management of the Trust and Portfolios . . . . . . . . . . . . . . .
Organization of the Trust . . . . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .
Appendix (Bond and Commercial Paper Ratings) . . . . . . . . . . A-1
As described in the Prospectus, the Trust seeks to achieve the investment
objectives of each Fund by investing all the investable assets ("Assets") of the
Fund in a diversified open-end management investment company having the same
investment objectives as such Fund. These investment companies are,
respectively, Asset Management Portfolio III, Asset Management Portfolio II and
Asset Management Portfolio (collectively, the "Portfolios"). Asset Management
Portfolio II and Asset Management Portfolio III are each a series of BT
Investment Portfolios.
Since the investment characteristics of the Funds will correspond directly
to those of the respective Portfolio in which the Fund invests all of its
assets, the following is a discussion of the various investments of and
techniques employed by the Portfolios.
Shares of the Funds are sold by Signature Broker-Dealer Services, Inc.
("Signature"), the Trust's distributor, to clients and customers (including
affiliates and correspondents) of Bankers Trust Company ("Bankers Trust"), the
Portfolios' investment adviser, and to clients and customers of other
organizations.
The Trust's Prospectus relating to the Funds, as amended from time to time,
is dated August 1, 1995, and provides the basic information investors should
know before investing, may be obtained without charge by calling the Trust at
the telephone number listed below or by contacting any Service Agent. This
Statement of Additional Information, which is not a Prospectus, is intended to
provide additional information regarding the activities and operations of the
Trust and should be read in conjunction with the Prospectus. Capitalized terms
not otherwise defined in this Statement of Additional Information have the
meanings accorded to them in the Trust's Prospectus.
BANKERS TRUST COMPANY
INVESTMENT ADVISER OF EACH PORTFOLIO AND ADMINISTRATOR
SIGNATURE BROKER-DEALER SERVICES, INC.
DISTRIBUTOR
6 St. James Avenue Boston, Massachusetts 02116 (800) 545-1074
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES
The investment objective(s) of each Fund is described in that Fund's
Prospectus. There can, of course, be no assurance that any Fund will achieve its
investment objective(s).
INVESTMENT POLICIES
Each Fund seeks to achieve its investment objective by investing all of its
Assets in the corresponding Portfolio. The Trust may withdraw a Fund's
investment from the corresponding Portfolio at any time if the Board of Trustees
of the Trust determines that it is in the best interests of the Fund to do so.
Since the investment characteristics of each Fund will correspond directly
to those of the corresponding Portfolio, the following is a discussion of the
various investments of and techniques employed by each Portfolio.
Certificates of Deposit and Bankers' Acceptances. Certificates of deposit
are receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.
Commercial Paper. Commercial paper consists of short-term (usually from 1
to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note (which is
a type of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.
For a description of commercial paper ratings, see the Appendix.
Illiquid Securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale because they
have not been registered under the Securities Act of 1933, as amended (the "1933
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven calendar days. Securities
which have not been registered under the 1933 Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations on resale may
have an adverse effect on the marketability of portfolio securities and a mutual
fund might be unable to dispose of restricted or other illiquid securities
promptly or at reasonable prices and might thereby experience difficulty
satisfying redemptions within seven calendar days. A mutual fund might also have
to register such restricted securities in order to dispose of them resulting in
additional expense and delay. Adverse market conditions could impede such a
public offering of securities.
In recent years, however, a large institutional market has developed for
certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale of such investments to the
general public or to certain institutions may not be indicative of their
liquidity.
The Securities and Exchange Commission (the "SEC") has adopted Rule 144A,
which allows a broader institutional trading market for securities otherwise
subject to restriction on their resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of the 1933 Act
for resales of certain securities to qualified institutional buyers. The Adviser
anticipates that the market for certain restricted securities such as
institutional commercial paper will expand further as a result of this
regulation and the development of automated systems for the trading, clearance
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers, Inc.
The Adviser will monitor the liquidity of Rule 144A securities in each
Portfolio's portfolio under the supervision of the Portfolio's Board of
Trustees. In reaching liquidity decisions, the Adviser will consider, among
other things, the following factors: (1) the frequency of trades and quotes for
the security; (2) the number of dealers and other potential purchasers wishing
to purchase or sell the security; (3) dealer undertakings to make a market in
the security and (4) the nature of the security and of the marketplace trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer).
Lending of Portfolio Securities. The Portfolios have the authority to lend
portfolio securities to brokers, dealers and other financial organizations. The
Portfolios will not lend securities to Bankers Trust, Signature or their
affiliates. By lending its securities, a Portfolio can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term securities or obtaining yield in the
form of interest paid by the borrower when U.S. Government obligations are used
as collateral. There may be risks of delay in receiving additional collateral or
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. Each
Portfolio will adhere to the following conditions whenever its securities are
loaned: (i) the Portfolio must receive at least 100 percent cash collateral or
equivalent securities from the borrower; (ii) the borrower must increase this
collateral whenever the market value of the securities including accrued
interest rises above the level of the collateral; (iii) the Portfolio must be
able to terminate the loan at any time; (iv) the Portfolio must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions on the loaned securities, and any increase in market value; (v)
the Portfolio may pay only reasonable custodian fees in connection with the
loan; and (vi) voting rights on the loaned securities may pass to the borrower;
provided, however, that if a material event adversely affecting the investment
occurs, the Board of Trustees must terminate the loan and regain the right to
vote the securities.
Futures Contracts and Options on Futures Contracts
General. The successful use of such instruments draws upon the Adviser's
skill and experience with respect to such instruments and usually depends on the
Adviser's ability to forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an unexpected manner, a
Portfolio may not achieve the anticipated benefits of futures contracts or
options on futures contracts or may realize losses and thus will be in a worse
position than if such strategies had not been used. In addition, the correlation
between movements in the price of futures contracts or options on futures
contracts and movements in the price of the securities and currencies hedged or
used for cover will not be perfect and could produce unanticipated losses.
Futures Contracts. Each Portfolio may enter into contracts for the purchase
or sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices including any index of U.S. Government
securities, foreign government securities or corporate debt securities. U.S.
futures contracts have been designed by exchanges which have been designated
"contracts markets" by the Commodity Futures Trading Commission ("CFTC"), and
must be executed through a futures commission merchant, or brokerage firm, which
is a member of the relevant contract market. Futures contracts trade on a number
of exchange markets, and, through their clearing corporations, the exchanges
guarantee performance of the contracts as between the clearing members of the
exchange. Each Portfolio may enter into futures contracts which are based on
debt securities that are backed by the full faith and credit of the U.S.
Government, such as long-term U.S. Treasury Bonds, Treasury Notes, Government
National Mortgage Association modified pass-through mortgage-backed securities
and three-month U.S. Treasury Bills. Each Portfolio may also enter into futures
contracts which are based on bonds issued by entities other than the U.S.
Government.
At the same time a futures contract is purchased or sold, the Portfolio
must allocate cash or securities as a deposit payment ("initial deposit"). It is
expected that the initial deposit would be approximately 1 1/2% to 5% of a
contract's face value. Daily thereafter, the futures contract is valued and the
payment of "variation margin" may be required, since each day the Portfolio
would provide or receive cash that reflects any decline or increase in the
contract's value.
At the time of delivery of securities pursuant to such a contract,
adjustments are made to recognize differences in value arising from the delivery
of securities with a different interest rate from that specified in the
contract. In some (but not many) cases, securities called for by a futures
contract may not have been issued when the contract was written.
Although futures contracts by their terms call for the actual delivery or
acquisition of securities, in most cases the contractual obligation is fulfilled
before the date of the contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is accomplished by buying
(or selling, as the case may be) on a commodities exchange an identical futures
contract calling for delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation to make or take
delivery of the securities. Since all transactions in the futures market are
made, offset or fulfilled through a clearinghouse associated with the exchange
on which the contracts are traded, a Portfolio will incur brokerage fees when it
purchases or sells futures contracts.
The purpose of the acquisition or sale of a futures contract, in the case
of a Portfolio which holds or intends to acquire fixed-income securities, is to
attempt to protect the Portfolio from fluctuations in interest or foreign
exchange rates without actually buying or selling fixed-income securities or
foreign currencies. For example, if interest rates were expected to increase,
the Portfolio might enter into futures contracts for the sale of debt
securities. Such a sale would have much the same effect as selling an equivalent
value of the debt securities owned by the Portfolio. If interest rates did
increase, the value of the debt security in the Portfolio would decline, but the
value of the futures contracts to the Portfolio would increase at approximately
the same rate, thereby keeping the net asset value of the Portfolio from
declining as much as it otherwise would have. The Portfolio could accomplish
similar results by selling debt securities and investing in bonds with short
maturities when interest rates are expected to increase. However, since the
futures market is more liquid than the cash market, the use of futures contracts
as an investment technique allows the Portfolio to maintain a defensive position
without having to sell its portfolio securities.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to attempt to hedge against anticipated purchases of
debt securities at higher prices. Since the fluctuations in the value of futures
contracts should be similar to those of debt securities, a Portfolio could take
advantage of the anticipated rise in the value of debt securities without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and the Portfolio could then buy debt securities
on the cash market. To the extent a Portfolio enters into futures contracts for
this purpose, the assets in the segregated asset account maintained to cover the
Portfolio's obligations with respect to such futures contracts will consist of
cash, cash equivalents or high quality liquid debt securities from its portfolio
in an amount equal to the difference between the fluctuating market value of
such futures contracts and the aggregate value of the initial and variation
margin payments made by the Portfolio with respect to such futures contracts.
The ordinary spreads between prices in the cash and futures market, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of general interest rate trends by the Adviser may still not
result in a successful transaction.
In addition, futures contracts entail risks. Although the Adviser believes
that use of such contracts will benefit the Portfolios, if the Adviser's
investment judgment about the general direction of interest rates is incorrect,
a Portfolio's overall performance would be poorer than if it had not entered
into any such contract. For example, if a Portfolio has hedged against the
possibility of an increase in interest rates which would adversely affect the
price of debt securities held in its portfolio and interest rates decrease
instead, the Portfolio will lose part or all of the benefit of the increased
value of its debt securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if a Portfolio
has insufficient cash, it may have to sell debt securities from its portfolio to
meet daily variation margin requirements. Such sales of bonds may be, but will
not necessarily be, at increased prices which reflect the rising market. A
Portfolio may have to sell securities at a time when it may be disadvantageous
to do so.
Options on Futures Contracts. Each Portfolio may purchase and write options
on futures contracts for hedging purposes. The purchase of a call option on a
futures contract is similar in some respects to the purchase of a call option on
an individual security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based or the price of
the underlying debt securities, it may or may not be less risky than ownership
of the futures contract or underlying debt securities. As with the purchase of
futures contracts, when a Portfolio is not fully invested it may purchase a call
option on a futures contract to hedge against a market advance due to declining
interest rates.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the exercise price, a Portfolio will retain
the full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Portfolio's portfolio holdings. The
writing of a put option on a futures contract constitutes a partial hedge
against increasing prices of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the Portfolio will
retain the full amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Portfolio intends to
purchase. If a put or call option the Portfolio has written is exercised, the
Portfolio will incur a loss which will be reduced by the amount of the premium
it receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures positions,
the Portfolio's losses from existing options on futures may to some extent be
reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Portfolio may purchase a put option on a futures contract to hedge
its portfolio against the risk of rising interest rates.
The amount of risk a Portfolio assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
The Board of Trustees of each Portfolio has also adopted a further
restriction that the Portfolio will not enter into any futures contracts or
options on futures contracts if immediately thereafter the amount of margin
deposits on all the futures contracts of the Portfolio and premiums paid on
outstanding options on futures contracts owned by the Portfolio (other than
those entered into for bona fide hedging purposes) would exceed 5% of the market
value of the total assets of the Portfolio.
Options on Foreign Currencies. Each Portfolio may purchase and write
options on foreign currencies for hedging purposes in a manner similar to that
in which futures contracts on foreign currencies, or forward contracts, will be
utilized. For example, a decline in the dollar value of a foreign currency in
which portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of portfolio securities,
the Portfolio may purchase put options on the foreign currency. If the value of
the currency does decline, a Portfolio will have the right to sell such currency
for a fixed amount in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Portfolio may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Portfolio deriving from purchases of foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, where currency exchange rates do not move in the
direction or to the extent anticipated, the Portfolio could sustain losses on
transactions in foreign currency options which would require it to forego a
portion or all of the benefits of advantageous changes in such rates.
Each Portfolio may write options on foreign currencies for the same types
of hedging purposes. For example, where a Portfolio anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected decline occurs,
the options will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the
Portfolio could write a put option on the relevant currency which, if rates move
in the manner projected, will expire unexercised and allow the Portfolio to
hedge such increased cost up to the amount of the premium. As in the case of
other types of options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may be
exercised and the Portfolio would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on foreign currencies, the Portfolio also may be required
to forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements in exchange rates.
Each Portfolio intends to write covered call options on foreign currencies.
A call option written on a foreign currency by a Portfolio is "covered" if the
Portfolio owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without additional
cash consideration (or for additional cash consideration held in a segregated
account by its Custodian) upon conversion or exchange of other foreign currency
held in its portfolio. A call option is also covered if the Portfolio has a call
on the same foreign currency and in the same principal amount as the call
written where the exercise price of the call held (a) is equal to or less than
the exercise price of the call written or (b) is greater than the exercise price
of the call written if the difference is maintained by the Portfolio in cash,
U.S. Government securities and other high quality liquid debt securities in a
segregated account with its custodian.
Each Portfolio also intends to write call options on foreign currencies
that are not covered for cross-hedging purposes. A call option on a foreign
currency is for cross-hedging purposes if it is not covered, but is designed to
provide a hedge against a decline in the U.S. dollar value of a security which
the Portfolio owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the exchange rate. In
such circumstances, the Portfolio collateralizes the option by maintaining in a
segregated account with its custodian, cash or U.S. Government securities or
other high quality liquid debt securities in an amount not less than the value
of the underlying foreign currency in U.S. dollars marked to market daily.
Additional Risks of Options on Futures Contracts, Forward Contracts and
Options on Foreign Currencies. Unlike transactions entered into by a Portfolio
in futures contracts, options on foreign currencies and forward contracts are
not traded on contract markets regulated by the CFTC or (with the exception of
certain foreign currency options) by the SEC. To the contrary, such instruments
are traded through financial institutions acting as market-makers, although
foreign currency options are also traded on certain national securities
exchanges, such as the Philadelphia Stock Exchange and the Chicago Board Options
Exchange, subject to SEC regulation. Similarly, options on currencies may be
traded over-the-counter. In an over-the-counter trading environment, many of the
protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
Although the purchaser of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could be lost.
Moreover, the option writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments, due to the margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"),
thereby reducing the risk of counterparty default. Further, a liquid secondary
market in options traded on a national securities exchange may be more readily
available than in the over-the-counter market, potentially permitting a
Portfolio to liquidate open positions at a profit prior to exercise or
expiration, or to limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.
As in the case of forward contracts, certain options on foreign currencies
are traded over-the-counter and involve liquidity and credit risks which may not
be present in the case of exchange-traded currency options. A Portfolio's
ability to terminate over-the-counter options will be more limited than with
exchange-traded options. It is also possible that broker-dealers participating
in over-the-counter options transactions will not fulfill their obligations.
Until such time as the staff of the SEC changes its position, each Portfolio
will treat purchased over-the-counter options and assets used to cover written
over-the-counter options as illiquid securities. With respect to options written
with primary dealers in U.S. Government securities pursuant to an agreement
requiring a closing purchase transaction at a formula price, the amount of
illiquid securities may be calculated with reference to the repurchase formula.
In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by: (i) other complex foreign
political and economic factors; (ii) lesser availability than in the United
States of data on which to make trading decisions; (iii) delays in the
Portfolio's ability to act upon economic events occurring in foreign markets
during nonbusiness hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (v) lesser trading volume.
Options on Securities. Each Portfolio may write (sell) covered call and put
options to a limited extent on its portfolio securities ("covered options") in
an attempt to increase income. However, the Portfolio may forgo the benefits of
appreciation on securities sold or may pay more than the market price on
securities acquired pursuant to call and put options written by the Portfolio.
When a Portfolio writes a covered call option, it gives the purchaser of
the option the right to buy the underlying security at the price specified in
the option (the "exercise price") by exercising the option at any time during
the option period. If the option expires unexercised, the Portfolio will realize
income in an amount equal to the premium received for writing the option. If the
option is exercised, a decision over which the Portfolio has no control, the
Portfolio must sell the underlying security to the option holder at the exercise
price. By writing a covered call option, the Portfolio forgoes, in exchange for
the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market value of the underlying
security above the exercise price.
When a Portfolio writes a covered put option, it gives the purchaser of the
option the right to sell the underlying security to the Portfolio at the
specified exercise price at any time during the option period. If the option
expires unexercised, the Portfolio will realize income in the amount of the
premium received for writing the option. If the put option is exercised, a
decision over which the Portfolio has no control, the Portfolio must purchase
the underlying security from the option holder at the exercise price. By writing
a covered put option, the Portfolio, in exchange for the net premium received,
accepts the risk of a decline in the market value of the underlying security
below the exercise price. The Portfolio will only write put options involving
securities for which a determination is made at the time the option is written
that the Portfolio wishes to acquire the securities at the exercise price.
A Portfolio may terminate its obligation as the writer of a call or put
option by purchasing an option with the same exercise price and expiration date
as the option previously written. This transaction is called a "closing purchase
transaction." Where the Portfolio cannot effect a closing purchase transaction,
it may be forced to incur brokerage commissions or dealer spreads in selling
securities it receives or it may be forced to hold underlying securities until
an option is exercised or expires.
When a Portfolio writes an option, an amount equal to the net premium
received by the Portfolio is included in the liability section of the
Portfolio's Statement of Assets and Liabilities as a deferred credit. The amount
of the deferred credit will be subsequently marked to market to reflect the
current market value of the option written. The current market value of a traded
option is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked price. If an option expires on its stipulated expiration
date or if the Portfolio enters into a closing purchase transaction, the
Portfolio will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was sold), and the
deferred credit related to such option will be eliminated. If a call option is
exercised, the Portfolio will realize a gain or loss from the sale of the
underlying security and the proceeds of the sale will be increased by the
premium originally received. The writing of covered call options may be deemed
to involve the pledge of the securities against which the option is being
written. Securities against which call options are written will be segregated on
the books of the custodian for the Portfolio.
A Portfolio may purchase call and put options on any securities in which it
may invest. The Portfolio would normally purchase a call option in anticipation
of an increase in the market value of such securities. The purchase of a call
option would entitle the Portfolio, in exchange for the premium paid, to
purchase a security at a specified price during the option period. The Portfolio
would ordinarily have a gain if the value of the securities increased above the
exercise price sufficiently to cover the premium and would have a loss if the
value of the securities remained at or below the exercise price during the
option period.
A Portfolio would normally purchase put options in anticipation of a
decline in the market value of securities in its portfolio ("protective puts")
or securities of the type in which it is permitted to invest. The purchase of a
put option would entitle the Portfolio, in exchange for the premium paid, to
sell a security, which may or may not be held in the Portfolio's portfolio, at a
specified price during the option period. The purchase of protective puts is
designed merely to offset or hedge against a decline in the market value of the
Portfolio's portfolio securities. Put options also may be purchased by the
Portfolio for the purpose of affirmatively benefiting from a decline in the
price of securities which the Portfolio does not own. The Portfolio would
ordinarily recognize a gain if the value of the securities decreased below the
exercise price sufficiently to cover the premium and would recognize a loss if
the value of the securities remained at or above the exercise price. Gains and
losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of underlying portfolio securities.
Each Portfolio has adopted certain other nonfundamental policies concerning
option transactions which are discussed below. Each Portfolio's activities in
options may also be restricted by the requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), for qualification as a regulated investment
company.
The hours of trading for options on securities may not conform to the hours
during which the underlying securities are traded. To the extent that the option
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying securities markets
that cannot be reflected in the option markets. It is impossible to predict the
volume of trading that may exist in such options, and there can be no assurance
that viable exchange markets will develop or continue.
Each Portfolio may engage in over-the-counter options transactions with
broker-dealers who make markets in these options. At present, approximately ten
broker-dealers, including several of the largest primary dealers in U.S.
Government securities, make these markets. The ability to terminate
over-the-counter option positions is more limited than with exchange-traded
option positions because the predominant market is the issuing broker rather
than an exchange, and may involve the risk that broker-dealers participating in
such transactions will not fulfill their obligations. To reduce this risk, the
Portfolio will purchase such options only from broker-dealers who are primary
government securities dealers recognized by the Federal Reserve Bank of New York
and who agree to (and are expected to be capable of) entering into closing
transactions, although there can be no guarantee that any such option will be
liquidated at a favorable price prior to expiration. The Adviser will monitor
the creditworthiness of dealers with whom the Portfolio enters into such options
transactions under the general supervision of the Portfolios' Trustees.
Options on Securities Indices. In addition to options on securities, each
Portfolio may also purchase and write (sell) call and put options on securities
indices. Such options give the holder the right to receive a cash settlement
during the term of the option based upon the difference between the exercise
price and the value of the index. Such options will be used for the purposes
described above under "Options on Securities."
Options on securities indices entail risks in addition to the risks of
options on securities. The absence of a liquid secondary market to close out
options positions on securities indices is more likely to occur, although a
Portfolio generally will only purchase or write such an option if the Adviser
believes the option can be closed out.
Use of options on securities indices also entails the risk that trading in
such options may be interrupted if trading in certain securities included in the
index is interrupted. Each Portfolio will not purchase such options unless the
Adviser believes the market is sufficiently developed such that the risk of
trading in such options is no greater than the risk of trading in options on
securities.
Price movements in a Portfolio's portfolio may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Adviser may be forced to liquidate portfolio securities
to meet settlement obligations.
Forward Foreign Currency Exchange Contracts. Because each Portfolio buys
and sells securities denominated in currencies other than the U.S. dollar and
receives interest, dividends and sale proceeds in currencies other than the U.S.
dollar, each Portfolio from time to time may enter into foreign currency
exchange transactions to convert to and from different foreign currencies and to
convert foreign currencies to and from the U.S. dollar. A Portfolio either
enters into these transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or uses forward contracts to
purchase or sell foreign currencies.
A forward foreign currency exchange contract is an obligation by a
Portfolio to purchase or sell a specific currency at a future date, which may be
any fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These contracts
are transferable in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward foreign
currency exchange contract generally has no deposit requirement and is traded at
a net price without commission. Each Portfolio maintains with its custodian a
segregated account of high grade liquid assets in an amount at least equal to
its obligations under each forward foreign currency exchange contract. Neither
spot transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of the Portfolio's securities or in foreign exchange
rates, or prevent loss if the prices of these securities should decline.
Each Portfolio may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a portfolio position
or an anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into Bankers Trust's long-term investment
decisions, a Portfolio will not routinely enter into foreign currency hedging
transactions with respect to security transactions; however, Bankers Trust
believes that it is important to have the flexibility to enter into foreign
currency hedging transactions when it determines that the transactions would be
in the Portfolio's best interest. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain that might be realized should
the value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
While these contracts are not presently regulated by the CFTC, the CFTC may
in the future assert authority to regulate forward contracts. In such event each
Portfolio's ability to utilize forward contracts in the manner set forth in the
Prospectus may be restricted. Forward contracts may reduce the potential gain
from a positive change in the relationship between the U.S. dollar and foreign
currencies. Unanticipated changes in currency prices may result in poorer
overall performance for a Portfolio than if it had not entered into such
contracts. The use of foreign currency forward contracts may not eliminate
fluctuations in the underlying U.S. dollar equivalent value of the prices of or
rates of return on a Portfolio's foreign currency denominated portfolio
securities and the use of such techniques will subject a Portfolio to certain
risks.
The matching of the increase in value of a forward contract and the decline
in the U.S. dollar equivalent value of the foreign currency denominated asset
that is the subject of the hedge generally will not be precise. In addition, a
Portfolio may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Portfolio's ability to
use such contract to hedge or cross-hedge its assets. Also, with regard to a
Portfolio's use of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies relative to the
U.S. dollar will continue. Thus, at any time poor correlation may exist between
movements in the exchange rates of the foreign currencies underlying a
Portfolio's cross-hedges and the movements in the exchange rates of the foreign
currencies in which the Portfolio's assets that are the subject of such
cross-hedges are denominated.
Rating Services
The ratings of rating services represent their opinions as to the quality
of the securities that they undertake to rate. It should be emphasized, however,
that ratings are relative and subjective and are not absolute standards of
quality. Although these ratings are an initial criterion for selection of
portfolio investments, Bankers Trust also makes its own evaluation of these
securities, subject to review by the Board of Trustees. After purchase by a
Portfolio, an obligation may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Portfolio. Neither event would
require a Fund to eliminate the obligation from its portfolio, but Bankers Trust
will consider such an event in its determination of whether a Fund should
continue to hold the obligation. A description of the ratings used herein and in
the Funds' Prospectus is set forth in the Appendix to this Statement of
Additional Information.
INVESTMENT RESTRICTIONS
The following investment restrictions are "fundamental policies" of each
Fund and each Portfolio and may not be changed with respect to the Fund or the
Portfolio without the approval of a "majority of the outstanding voting
securities" of the Fund or the Portfolio, as the case may be. "Majority of the
outstanding voting securities" under the Investment Company Act of 1940, as
amended (the "1940 Act"), and as used in this Statement of Additional
Information and the Prospectus, means, with respect to the Fund (or the
Portfolio), the lesser of (i) 67% or more of the outstanding voting securities
of the Fund (or of the total beneficial interests of the Portfolio) present at a
meeting, if the holders of more than 50% of the outstanding voting securities of
the Fund or of the total beneficial interests of the Portfolio) are present or
represented by proxy or (ii) more than 50% of the outstanding voting securities
of the Fund (or of the total beneficial interests of the Portfolio). Whenever
the Trust is requested to vote on a fundamental policy of a Portfolio, the Trust
will hold a meeting of the corresponding Fund's shareholders and will cast its
vote as instructed by that Fund's shareholders.
As a matter of fundamental policy, each Portfolio (or Fund) may not (except
that no investment restriction of a Fund shall prevent a Fund from investing all
of its Assets in an open-end investment company with substantially the same
investment objectives):
(1) borrow money or mortgage or hypothecate assets of the Portfolio (Fund),
except that in an amount not to exceed 1/3 of the current value of the
Portfolio's (Fund's) assets, it may borrow money as a temporary measure for
extraordinary or emergency purposes and enter into reverse repurchase agreements
or dollar roll transactions, and except that it may pledge, mortgage or
hypothecate not more than 1/3 of such assets to secure such borrowings (it is
intended that money would be borrowed only from banks and only either to
accommodate requests for the withdrawal of beneficial interests (redemption of
shares) while effecting an orderly liquidation of portfolio securities or to
maintain liquidity in the event of an unanticipated failure to complete a
portfolio security transaction or other similar situations) or reverse
repurchase agreements, provided that collateral arrangements with respect to
options and futures, including deposits of initial deposit and variation margin,
are not considered a pledge of assets for purposes of this restriction and
except that assets may be pledged to secure letters of credit solely for the
purpose of participating in a captive insurance company sponsored by the
Investment Company Institute; for additional related restrictions, see clause
(i) under the caption "State and Federal Restrictions" below (as an operating
policy, the Portfolios may not engage in dollar roll transactions);
(2) underwrite securities issued by other persons except insofar as the
Portfolios (Trust or the Funds) may technically be deemed an underwriter under
the 1933 Act in selling a portfolio security;
(3) make loans to other persons except: (a) through the lending of the
Portfolio's (Fund's) portfolio securities and provided that any such loans not
exceed 30% of the Portfolio's (Fund's) total assets (taken at market value); (b)
through the use of repurchase agreements or the purchase of short-term
obligations; or (c) by purchasing a portion of an issue of debt securities of
types distributed publicly or privately (under current regulations, the
Portfolio's (Fund's) fundamental policy with respect to 20% risk weighing for
financial institutions prevent the Portfolio (Fund) from engaging in securities
lending);
(4) purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein), interests
in oil, gas or mineral leases, commodities or commodity contracts (except
futures and option contracts) in the ordinary course of business (except that
the Portfolio (Trust) may hold and sell, for the Portfolio's (Fund's) portfolio,
real estate acquired as a result of the Portfolio's (Fund's) ownership of
securities);
(5) concentrate its investments in any particular industry (excluding U.S.
Government securities), but if it is deemed appropriate for the achievement of a
Portfolio's (Fund's) investment objective(s), up to 25% of its total assets may
be invested in any one industry; and
(6) issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, provided that collateral arrangements with
respect to options and futures, including deposits of initial deposit and
variation margin, are not considered to be the issuance of a senior security for
purposes of this restriction.
As an operating policy, each Portfolio will not invest in another open-end
registered investment company.
State and Federal Restrictions. In order to comply with certain state and
Federal statutes and policies each Portfolio (or the Trust, on behalf of each
Fund) will not as a matter of operating policy (except that no operating policy
shall prevent a Fund from investing all of its Assets in an open-end investment
company with substantially the same investment objectives):
(i) borrow money (including through reverse repurchase or dollar roll
transactions) for any purpose in excess of 5% of the Portfolio's
(Fund's) total assets (taken at cost), except that the Portfolio
(Fund) may borrow for temporary or emergency purposes up to 1/3 of its
total assets;
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the Portfolio's (Fund's) total assets (taken at market value),
provided that collateral arrangements with respect to options and
futures, including deposits of initial deposit and variation margin,
and reverse repurchase agreements are not considered a pledge of
assets for purposes of this restriction;
(iii) purchase any security or evidence of interest therein on margin,
except that such short-term credit as may be necessary for the
clearance of purchases and sales of securities may be obtained and
except that deposits of initial deposit and variation margin may be
made in connection with the purchase, ownership, holding or sale of
futures;
(iv) sell securities it does not own such that the dollar amount of such
short sales at any one time exceeds 25% of the net equity of the
Portfolio (Fund), and the value of securities of any one issuer in
which the Portfolio (Fund) is short exceeds the lesser of 2.0% of the
value of the Portfolio's (Fund's) net assets or 2.0% of the securities
of any class of any U.S. issuer and, provided that short sales may be
made only in those securities which are fully listed on a national
securities exchange or a foreign exchange (This provision does not
include the sale of securities of the Portfolio (Fund)
contemporaneously owns or has the right to obtain securities
equivalent in kind and amount to those sold, i.e., short sales against
the box.) (The Portfolios (Funds) have no current intention to engage
in short selling.);
(v) invest for the purpose of exercising control or management;
(vi) purchase securities issued by any investment company except by
purchase in the open market where no commission or profit to a sponsor
or dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open
market, is part of a plan of merger or consolidation; provided,
however, that securities of any investment company will not be
purchased for the Portfolio (Fund) if such purchase at the time
thereof would cause: (a) more than 10% of the Portfolio's (Fund's)
total assets (taken at the greater of cost or market value) to be
invested in the securities of such issuers; (b) more than 5% of the
Portfolio's (Fund's) total assets (taken at the greater of cost or
market value) to be invested in any one investment company; or (c)
more than 3% of the outstanding voting securities of any such issuer
to be held for the Portfolio (Fund); provided further that, except in
the case of a merger or consolidation, the Portfolio (Fund) shall not
purchase any securities of any open-end investment company unless the
Portfolio (Fund) (1) waives the investment advisory fee with respect
to assets invested in other open-end investment companies and (2)
incurs no sales charge in connection with the investment;
(vii) invest more than 10% of the Portfolio's (Fund's) total assets (taken
at the greater of cost or market value) in securities (excluding Rule
144A securities) that are restricted as to resale under the 1933 Act;
(viii) invest more than 15% of the Portfolio's (Fund's) total assets (taken
at the greater of cost or market value) in (a) securities (including
Rule 144A securities) that are restricted as to resale under the 1933
Act, and (b) securities that are issued by issuers which (including
predecessors) have been in operation less than three years (other than
U.S. Government securities), provided, however, that no more than 5%
of the Portfolio's (Fund's) total assets are invested in securities
issued by issuers which (including predecessors) have been in
operation less than three years;
(ix) with respect to 75% of the Portfolio's (Fund's) total assets, purchase
securities of any issuer if such purchase at the time thereof would
cause the Portfolio (Fund) to hold more than 10% of any class of
securities of such issuer, for which purposes all indebtedness of an
issuer shall be deemed a single class and all preferred stock of an
issuer shall be deemed a single class, except that futures or option
contracts shall not be subject to this restriction;
(x) with respect to 75% of its assets, invest more than 5% of its total
assets in the securities (excluding U.S. Government securities) of any
one issuer;
(xi) invest in securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of
the Portfolio (Trust), or is an officer or partner of the Adviser, if
after the purchase of the securities of such issuer for the Portfolio
(Fund) one or more of such persons owns beneficially more than 1/2 of
1% of the shares or securities, or both, all taken at market value, of
such issuer, and such persons owning more than 1/2 of 1% of such
shares or securities together own beneficially more than 5% of such
shares or securities, or both, all taken at market value;
(xii) invest in warrants (other than warrants acquired by the Portfolio
(Fund) as part of a unit or attached to securities at the time of
purchase) if, as a result, the investments (valued at the lower of
cost or market) would exceed 5% of the value of the Portfolio's
(Fund's) net assets or if, as a result, more than 2% of the
Portfolio's (Fund's) net assets would be invested in warrants not
listed on a recognized United States or foreign stock exchange, to the
extent permitted by applicable state securities laws;
(xiii) write puts and calls on securities unless each of the following
conditions are met: (a) the security underlying the put or call is
within the investment policies of the Portfolio (Fund) and the option
is issued by the Options Clearing Corporation, except for put and call
options issued by non-U.S. entities or listed on non-U.S. securities
or commodities exchanges; (b) the aggregate value of the obligations
underlying the puts determined as of the date the options are sold
shall not exceed 5% of the Portfolio's (Fund's) net assets; (c) the
securities subject to the exercise of the call written by the
Portfolio (Fund) must be owned by the Portfolio (Fund) at the time the
call is sold and must continue to be owned by the Portfolio (Fund)
until the call has been exercised, has lapsed, or the Portfolio (Fund)
has purchased a closing call, and such purchase has been confirmed,
thereby extinguishing the Portfolio's (Fund's) obligation to deliver
securities pursuant to the call it has sold; and (d) at the time a put
is written, the Portfolio (Fund) establishes a segregated account with
its custodian consisting of cash or short-term U.S. Government
securities equal in value to the amount the Portfolio (Fund) will be
obligated to pay upon exercise of the put (this account must be
maintained until the put is exercised, has expired, or the Portfolio
(Fund) has purchased a closing put, which is a put of the same series
as the one previously written); and
(xiv) buy and sell puts and calls on securities, stock index futures or
options on stock index futures, or financial futures or options on
financial futures unless such options are written by other persons
and: (a) the options or futures are offered through the facilities of
a national securities association or are listed on a national
securities or commodities exchange, except for put and call options
issued by non-U.S. entities or listed on non-U.S. securities or
commodities exchanges; (b) the aggregate premiums paid on all such
options which are held at any time do not exceed 20% of the
Portfolio's (Fund's) total net assets; and (c) the aggregate margin
deposits required on all such futures or options thereon held at any
time do not exceed 5% of the Portfolio's (Fund's) total assets.
There will be no violation of any investment restriction if that
restriction is complied with at the time the relevant action is taken
notwithstanding a later change in market value of an investment, in net or total
assets, in the securities rating of the investment, or any other later change.
Each Fund will comply with the state securities laws and regulations of all
states in which it is registered. Each Portfolio will comply with the permitted
investments and investment limitations in the securities laws and regulations of
all states in which the corresponding Fund, or any other registered investment
company investing in the Portfolio, is registered.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
The Adviser is responsible for decisions to buy and sell securities,
futures contracts and options on such securities and futures for each Portfolio,
the selection of brokers, dealers and futures commission merchants to effect
transactions and the negotiation of brokerage commissions, if any.
Broker-dealers may receive brokerage commissions on portfolio transactions,
including options, futures and options on futures transactions and the purchase
and sale of underlying securities upon the exercise of options. Orders may be
directed to any broker-dealer or futures commission merchant, including to the
extent and in the manner permitted by applicable law, Bankers Trust or its
subsidiaries or affiliates. Purchases and sales of certain portfolio securities
on behalf of a Portfolio are frequently placed by the Adviser with the issuer or
a primary or secondary market-maker for these securities on a net basis, without
any brokerage commission being paid by the Portfolio. Trading does, however,
involve transaction costs. Transactions with dealers serving as market-makers
reflect the spread between the bid and asked prices. Transaction costs may also
include fees paid to third parties for information as to potential purchasers or
sellers of securities. Purchases of underwritten issues may be made which will
include an underwriting fee paid to the underwriter.
The Adviser seeks to evaluate the overall reasonableness of the brokerage
commissions paid (to the extent applicable) in placing orders for the purchase
and sale of securities for a Portfolio taking into account such factors as
price, commission (negotiable in the case of national securities exchange
transactions), if any, size of order, difficulty of execution and skill required
of the executing broker-dealer through familiarity with commissions charged on
comparable transactions, as well as by comparing commissions paid by the
Portfolio to reported commissions paid by others. The Adviser reviews on a
routine basis commission rates, execution and settlement services performed,
making internal and external comparisons.
The Adviser is authorized, consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended, when placing portfolio transactions for a
Portfolio with a broker to pay a brokerage commission (to the extent applicable)
in excess of that which another broker might have charged for effecting the same
transaction on account of the receipt of research, market or statistical
information. The term "research, market or statistical information" includes
advice as to the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or purchasers
or sellers of securities; and furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts.
Consistent with the policy stated above, the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. and such other policies as the
Trustees of the Portfolio may determine, the Adviser may consider sales of
shares of the Trust and of other investment company clients of Bankers Trust as
a factor in the selection of broker-dealers to execute portfolio transactions.
Bankers Trust will make such allocations if commissions are comparable to those
charged by nonaffiliated, qualified broker-dealers for similar services.
Higher commissions may be paid to firms that provide research services to
the extent permitted by law. Bankers Trust may use this research information in
managing the Portfolio's assets, as well as the assets of other clients.
Except for implementing the policies stated above, there is no intention to
place portfolio transactions with particular brokers or dealers or groups
thereof. In effecting transactions in over-the-counter securities, orders are
placed with the principal market-makers for the security being traded unless,
after exercising care, it appears that more favorable results are available
otherwise.
Although certain research, market and statistical information from brokers
and dealers can be useful to a Portfolio and to the Adviser, it is the opinion
of the management of the Portfolios that such information is only supplementary
to the Adviser's own research effort, since the information must still be
analyzed, weighed and reviewed by the Adviser's staff. Such information may be
useful to the Adviser in providing services to clients other than the
Portfolios, and not all such information is used by the Adviser in connection
with the Portfolios. Conversely, such information provided to the Adviser by
brokers and dealers through whom other clients of the Adviser effect securities
transactions may be useful to the Adviser in providing services to the
Portfolios.
In certain instances there may be securities which are suitable for a
Portfolio as well as for one or more of the Adviser's other clients. Investment
decisions for a Portfolio and for the Adviser's other clients are made with a
view to achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though it might
be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as a Portfolio is concerned. However, it is believed that
the ability of a Portfolio to participate in volume transactions will produce
better executions for the Portfolio.
The Asset Management Portfolio paid brokerage commissions in the amount of
$118,748 for the fiscal year ended March 31, 1995 and $42,311 for the period
from September 16, 1993 (commencement of operations) through March 31, 1994.
The Asset Management Portfolio II paid brokerage commissions in the amount
of $25,346 for the fiscal year ended March 31, 1995 and $9,424 for the period
from October 14, 1993 (commencement of operations) through March 31, 1994.
The Asset Management Portfolio III paid brokerage commissions in the amount
of $15,143 for the fiscal year ended March 31, 1995 and $5,814 for the period
from October 15, 1993 (commencement of operations) through March 31, 1994.
PERFORMANCE INFORMATION
STANDARD PERFORMANCE INFORMATION
From time to time, quotations of a Fund's performance may be included in
advertisements, sales literature or shareholder reports. These performance
figures are calculated in the following manner:
Yield: Yields for a Fund used in advertising are computed by dividing the
Fund's interest and dividend income for a given 30-day or one-month period, net
of expenses, by the average number of shares entitled to receive distributions
during the period, dividing this figure by the Fund's net asset value per share
at the end of the period, and annualizing the result (assuming compounding of
income) in order to arrive at an annual percentage rate. Income is calculated
for purpose of yield quotations in accordance with standardized methods
applicable to all stock and bond mutual funds. Dividends from equity investments
are treated as if they were accrued on a daily basis, solely for the purpose of
yield calculations. In general, interest income is reduced with respect to bonds
trading at a premium over their par value by subtracting a portion of the
premium from income on a daily basis, and is increased with respect to bonds
trading at a discount by adding a portion of the discount to daily income.
Capital gains and losses generally are excluded from the calculation.
Income calculated for the purposes of calculating a Fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed in
yield calculations, the yield quoted for a Fund may differ from the rate of
distributions of the Fund paid over the same period or the rate of income
reported in the Fund's financial statements. The Funds' yields were as follows
for the 30-day period ended March 31, 1995:
BT Investment Lifecycle Short Range Fund 5.07%
BT Investment Lifecycle Mid Range Fund 4.65%
BT Investment Lifecycle Long Range Fund 3.77%
Total return: A Fund's average annual total return is calculated for
certain periods by determining the average annual compounded rates of return
over those periods that would cause an investment of $1,000 (made at the maximum
public offering price with all distributions reinvested) to reach the value of
that investment at the end of the periods. A Fund may also calculate total
return figures which represent aggregate performance over a period or
year-by-year performance. Each Fund's one-year total return, average annual
total return and aggregate total return for the fiscal year ended March 31, 1995
were as follows:
BT Investment BT Investment BT Investment
Short Mid Long
Range Fund 1 Range Fund 2 Range Fund 3
One-Year 3.08% 5.24% 6.60%
Total Return for Fiscal
Year Ended 3/31/95
Average Annual (0.33)% 0.01% 2.32%
Total Return
for the Period from
Commencement of
Operations through
3/31/95
Aggregate -0.48% 0.01% 3.19%
Total Return for
the Period from
Commencement of
Operations through
3/31/95
1 Fund commenced operations on October 15, 1993.
2 Fund commenced operations on October 14, 1993.
3 Fund commenced operations on November 16, 1993.
PERFORMANCE RESULTS: Any total return quotation provided for a Fund should
not be considered as representative of the performance of the Fund in the future
since the net asset value and public offering price of shares of the Fund will
vary based not only on the type, quality and maturities of the securities held
in the corresponding Portfolio, but also on changes in the current value of such
securities and on changes in the expenses of the Fund and the corresponding
Portfolio. These factors and possible differences in the methods used to
calculate total return should be considered when comparing the total return of a
Fund to total returns published for other investment companies or other
investment vehicles. Total return reflects the performance of both principal and
income.
COMPARISON OF FUND PERFORMANCE
Comparison of the quoted nonstandardized performance of various investments
is valid only if performance is calculated in the same manner. Since there are
different methods of calculating performance, investors should consider the
effect of the methods used to calculate performance when comparing performance
of a Fund with performance quoted with respect to other investment companies or
types of investments.
In connection with communicating its performance to current or prospective
shareholders, a Fund also may compare these figures to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs. Evaluations of a Fund's
performance made by independent sources may also be used in advertisements
concerning the Fund. Sources for a Fund's performance information could include
the following:
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
Changing Times, The Kiplinger Magazine, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
Consumer Digest, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
Financial Times, Europe's business newspaper, which features from time to time
articles on international or country-specific funds.
Financial World, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
Fortune, a national business publication that periodically rates the performance
of a variety of mutual funds.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
Investor's Daily, a daily newspaper that features financial, economic and
business news.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a weekly
publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
Morningstar Inc., a publisher of financial information and mutual fund research.
New York Times, a nationally distributed newspaper which regularly covers
financial news.
Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.
Personal Investor, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings. Success, a monthly magazine targeted to
the world of entrepreneurs and growing business, often featuring mutual fund
performance data.
U.S. News and World Report, a national business weekly that periodically reports
mutual fund performance data.
Value Line, a biweekly publication that reports on the largest 15,000 mutual
funds.
Wall Street Journal, a Dow Jones and Company, Inc. newspaper which regularly
covers financial news.
Weisenberger Investment Companies Services, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records, and price ranges.
Working Women, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.
VALUATION OF SECURITIES; REDEMPTIONS AND PURCHASES IN KIND
Equity and debt securities (other than short-term debt obligations maturing
in 60 days or less), including listed securities and securities for which price
quotations are available, will normally be valued on the basis of market
valuations furnished by a pricing service. Short-term debt obligations and money
market securities maturing in 60 days or less are valued at amortized cost,
which approximates market.
Securities for which market quotations are not available are valued by
Bankers Trust pursuant to procedures adopted by each Portfolio's Board of
Trustees. It is generally agreed that securities for which market quotations are
not readily available should not be valued at the same value as that carried by
an equivalent security which is readily marketable.
The problems inherent in making a good faith determination of value are
recognized in the codification effected by SEC Financial Reporting Release No. 1
("FRR 1" (formerly Accounting Series Release No. 113)) which concludes that
there is "no automatic formula" for calculating the value of restricted
securities. It recommends that the best method simply is to consider all
relevant factors before making any calculation. According to FRR 1 such factors
would include consideration of the:
type of security involved, financial statements, cost at
date of purchase, size of holding, discount from market
value of unrestricted securities of the same class at the
time of purchase, special reports prepared by analysts,
information as to any transactions or offers with respect to
the security, existence of merger proposals or tender offers
affecting the security, price and extent of public trading
in similar securities of the issuer or comparable companies,
and other relevant matters.
To the extent that a Portfolio purchases securities which are restricted as
to resale or for which current market quotations are not available, the Adviser
of the Portfolio will value such securities based upon all relevant factors as
outlined in FRR 1.
The Trust, on behalf of each Fund, and each Portfolio reserve the right, if
conditions exist which make cash payments undesirable, to honor any request for
redemption or repurchase order by making payment in whole or in part in readily
marketable securities chosen by the Trust, or the Portfolio, as the case may be,
and valued as they are for purposes of computing the Fund's or the Portfolio's
net asset value, as the case may be (a redemption in kind). If payment is made
to a Fund shareholder in securities, an investor, including the Fund, the
shareholder may incur transaction expenses in converting these securities into
cash. The Trust, on behalf of each Fund, and each Portfolio have elected,
however, to be governed by Rule 18f-1 under the 1940 Act as a result of which
each Fund and each Portfolio are obligated to redeem shares or beneficial
interests, as the case may be, with respect to any one investor during any
90-day period, solely in cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund or the Portfolio, as the case may be, at the beginning
of the period.
Each Portfolio has agreed to make a redemption in kind to the corresponding
Fund whenever the Fund wishes to make a redemption in kind and therefore
shareholders of the Fund that receive redemptions in kind will receive portfolio
securities of the corresponding Portfolio and in no case will they receive a
security issued by the Portfolio. The Portfolio has advised the Trust that the
Portfolio will not redeem in kind except in circumstances in which the Fund is
permitted to redeem in kind or unless requested by the Fund.
Each investor in a Portfolio, including the corresponding Fund, may add to
or reduce its investment in the Portfolio on each day the Portfolio determines
its net asset value. At the close of each such business day, the value of each
investor's beneficial interest in the Portfolio will be determined by
multiplying the net asset value of the Portfolio by the percentage , effective
for that day, which represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or withdrawals which are to be
effected as of the close of business on that day will then be effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio
will then be recomputed as the percentage equal to the fraction (i) the
numerator of which is the value of such investor's investment in the Portfolio
as of the close of business on such day plus or minus, as the case may be, the
amount of net additions to or withdrawals from the investor's investment in the
Portfolio effected as of the close of business on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of business on such day plus or minus, as the case may be, the amount of
net additions to or withdrawals from the aggregate investments in the Portfolio
by all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio as
the close of business on the following business day .
Each Fund may, at its own option, accept securities in payment for shares.
The securities delivered in payment for shares are valued by the method
described under "Net Asset Value" as of the day the Fund receives the
securities. This is a taxable transaction to the shareholder. Securities may be
accepted in payment for shares only if they are, in the judgment of Bankers
Trust, appropriate investments for the Fund's corresponding Portfolio. In
addition, securities accepted in payment for shares must: (i) meet the
investment objective and policies of the acquiring Fund's corresponding
Portfolio; (ii) be acquired by the applicable Fund for investment and not for
resale (other than for resale to the Fund's corresponding Portfolio); (iii) be
liquid securities which are not restricted as to transfer either by law or
liquidity of market; and (iv) if stock, have a value which is readily
ascertainable as evidenced by a listing on a stock exchange, over-the-counter
market or by readily available market quotations from a dealer in such
securities. Each Fund reserves the right to accept or reject at its own option
any and all securities offered in payment for its shares.
MANAGEMENT OF THE TRUST AND PORTFOLIOS
The Trustees and officers of the Trust and Portfolios and their principal
occupations during the past five years are set forth below. Their titles may
have varied during that period. Asterisks indicate those Trustees who are
"interested persons" (as defined in the 1940 Act) of the Trust. Unless otherwise
indicated, the address of each Trustee and officer is 6 St. James Avenue,
Boston, Massachusetts.
TRUSTEES OF THE TRUST
KELVIN J. LANCASTER Trustee; Professor, Department of Economics, Columbia
University. His address is 35 Claremont Avenue, New York, New York 10027.
PHILIP SAUNDERS, JR. Trustee; Principal, Philip Saunders Associates
(Consulting); former Director of Financial Industry Consulting, Wolf & Company;
President, John Hancock Home Mortgage Corporation; and Senior Vice President of
Treasury and Financial Services, John Hancock Mutual Life Insurance Company,
Inc. His address is 445 Glen Road, Weston, Massachusetts 02193.
PHILIP W. COOLIDGE* President and Trustee; Chairman, Chief Executive
Officer and President, Signature Financial Group, Inc. ("SFG") (since December,
1988) and Signature (since April, 1989).
TRUSTEES OF THE PORTFOLIOS
CHARLES P. BIGGAR Trustee; Retired; Director of Chase/NBW Bank Advisory
Board; Director, Batemen, Eichler, Hill Richards Inc.; formerly Vice President
of International Business Machines and President of the National Services and
the Field Engineering Divisions of IBM. His address is 12 Hitching Post Lane,
Chappaqua, New York 10514.
S. LELAND DILL Trustee; Retired; Director, Coutts & Co. Trust Holdings
Limited and Coutts & Co. (U.S.A.) International; Director, Zweig Cash Fund and
Zweig Series Trust; formerly Partner of KPMG Peat Marwick; Director, Vinters
International Company Inc.; General Partner of Pemco (an investment company
registered under the 1940 Act). His address is 5070 North Ocean Drive, Singer
Island, Florida 33404.
PHILIP W. COOLIDGE* President and Trustee; Chairman, Chief Executive
Officer and President, SFG (since December, 1988) and Signature (since April,
1989).
OFFICERS OF THE TRUST AND PORTFOLIOS
Unless otherwise specified, each officer listed below holds the same
position with the Trust and each Portfolio.
JAMES B. CRAVER Treasurer and Secretary; Senior Vice President, SFG (since
January, 1991); Secretary, Signature (since January, 1991); Partner, Baker &
Hostetler (prior to January, 1991).
LINDA T. GIBSON Assistant Secretary; Legal Counsel and Assistant Secretary,
SFG (since May, 1992); Assistant Secretary, Signature (since October, 1992);
student, Boston University School of Law (September, 1989 to May, 1992); Product
Manager, SFG (January, 1989 to September, 1989).
THOMAS M. LENZ Assistant Secretary; Vice President and Associate General
Counsel, SFG (since November, 1989); Assistant Secretary, Signature (since
February, 1991); Attorney, Ropes & Gray (prior to November, 1989).
MOLLY S. MUGLER Assistant Secretary; Legal Counsel and Assistant Secretary,
SFG (since December, 1988); Assistant Secretary, Signature (since April, 1989).
ANDRES E. SALDANA Assistant Secretary; Legal Counsel, SFG (since November,
1992); Assistant Secretary, Signature (since September, 1993); Attorney, Ropes &
Gray (September, 1990 to November, 1992); law student, Yale Law School
(September, 1987 to May, 1990).
DAVID G. DANIELSON Assistant Treasurer; Assistant Manager, SFG (since May
1991); graduate student, Northeastern University (from April 1990 to March
1991); Tax Accountant and Systems Analyst, Putnam Companies (prior to March
1990).
JAMES S. LELKO, JR. Assistant Treasurer; Assistant Manager, SFG (since
January 1993); Senior Tax Compliance Accountant, Putnam Investments (prior to
December 1992).
BARBARA M. O'DETTE Assistant Treasurer; Assistant Treasurer, SFG (since
December, 1988) and Signature (since April, 1989); Administrative Controller,
Massachusetts Financial Services Company (prior to December, 1988).
DANIEL E. SHEA Assistant Treasurer; Assistant Manager, SFG (since November
1993); Supervisor and Senior Technical Advisor, Putnam Investments (prior to
November 1993).
Messrs. Coolidge, Craver, Lenz, Saldana, Danielson, Lelko and Shea and Mss.
Gibson, Mugler and O'Dette also hold similar positions for other investment
companies for which Signature or an affiliate serves as the principal
underwriter.
No person who is an officer or director of Bankers Trust is an officer or
Trustee of the Trust or the Portfolios. No director, officer or employee of
Signature or any of its affiliates will receive any compensation from the Trust
or the Portfolios for serving as an officer or Trustee of the Trust or the
Portfolios. The Trust pays each Trustee who is not a director, officer or
employee of the Adviser, the Distributor, the Administrator or any of their
affiliates an annual fee of $10,000, respectively, per annum plus $500,
respectively, per meeting attended and reimburses them for travel and
out-of-pocket expenses. The Portfolios, Cash Management Portfolio, Treasury
Money Portfolio, Tax Free Money Portfolio, NY Tax Free Money Portfolio, Equity
500 Index Portfolio, Short/Intermediate U.S. Government Securities Portfolio,
Intermediate Tax Free Portfolio, Utility Portfolio, Capital Appreciation
Portfolio and International Equity Portfolio (together with the Trust, the "Fund
Complex") collectively pay each Trustee who is not a director, officer or
employee of the Adviser, the Distributor, the Administrator or any of their
affiliates an annual fee of $10,000, respectively, per annum plus $500,
respectively, per meeting attended and reimburses them for travel and
out-of-pocket expenses.
Bankers Trust reimbursed the Funds and the Portfolios for a portion of
their Trustees fees for the periods indicated above. See "Investment Adviser"
and "Administrator" below.
<TABLE>
<CAPTION>
TRUSTEE COMPENSATION TABLE
PENSION OR
RETIREMENT
AGGREGATE BENEFITS ACCRUED
COMPENSATION AS PART OF TRUST ESTIMATED ANNUAL TOTAL COMPENSATION
NAME OF PERSON, FROM TRUST OR PORTFOLIOS BENEFITS UPON FROM FUND COMPLEX
POSITION OR PORTFOLIOS EXPENSES RETIREMENT PAID TO TRUSTEES
---------------- -------------- ----------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Kelvin J. Lancaster, $12,000 none none $12,000
Trustee of Trust
Philip Saunders, Jr., $12,000 none none $12,000
Trustee of Trust
Philip W. Coolidge, none none none none
Trustee of Trust
and Portfolios
Charles P. Biggar, $12,000 none none $12,000
Trustee of Portfolios
S. Leland Dill, $12,000 none none $12,000
Trustee of Portfolios
</TABLE>
In Trustees fees, the BT Investment Lifecycle Short Range Fund accrued
$1,257 for the fiscal year ended March 31, 1995. During the same period, Asset
Management Portfolio III accrued $1,178.
In Trustees fees, the BT Investment Lifecycle Mid Range Fund accrued $1,265
for the fiscal year ended March 31, 1995. During the same period, Asset
Management Portfolio II accrued $1,180.
In Trustees fees, the BT Investment Lifecycle Long Range Fund accrued
$1,186 for the fiscal year ended March 31, 1995. During the same period, Asset
Management Portfolio accrued $1,212.
As of March 1, 1995, the Trustees and officers of the Trust and the
Portfolios owned in the aggregate less than 1% of the shares of any Fund or the
Trust (all series taken together). As of June 30, 1995, the following record
owners held the indicated percentage of the outstanding shares of the Funds:
Bankers Trust, on behalf of its customers -- BT Investment Lifecyle Long Range
Fund, 40.54%; BT Investment Lifecycle Mid Range Fund, 63.26%; and BT Investment
Lifecycle Short Range Fund 73.42%; Westinghouse Personal Investment Plan -- BT
Investment Lifecycle Long Range Fund, 42.51%; BT Investment Lifecycle Mid Range
Fund, 36.64%; and BT Investment Lifecycle Short Range Fund, 26.53%; and Bates
Container Inc. -- BT Investment Lifecycle Long Range Fund, 12.20%. Shareholders
owning 25% or more of the outstanding shares of a Fund may take actions without
the approval of any other investor in that Fund.
INVESTMENT ADVISER
Under the terms of each Portfolio's investment advisory agreement with
Bankers Trust (the "Advisory Agreement"), Bankers Trust manages the Portfolio
subject to the supervision and direction of the Board of Trustees of the
Portfolio. Bankers Trust will: (i) act in strict conformity with each
Portfolio's Declaration of Trust, the 1940 Act and the Investment Advisers Act
of 1940, as the same may from time to time be amended; (ii) manage each
Portfolio in accordance with the Portfolio's investment objectives, restrictions
and policies; (iii) make investment decisions for each Portfolio; and (iv) place
purchase and sale orders for securities and other financial instruments on
behalf of each Portfolio.
Bankers Trust bears all expenses in connection with the performance of
services under each Advisory Agreement. The Trust and each Portfolio bears
certain other expenses incurred in its operation, including: taxes, interest,
brokerage fees and commissions, if any; fees of Trustees of the Trust or the
Portfolio who are not officers, directors or employees of Bankers Trust,
Signature or any of their affiliates; SEC fees and state Blue Sky qualification
fees; charges of custodians and transfer and dividend disbursing agents; certain
insurance premiums; outside auditing and legal expenses; costs of maintenance of
corporate existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of shareholders, officers and Trustees of the Trust or the
Portfolio; and any extraordinary expenses.
For compensation of investment advisory services provided to the Asset
Management Portfolio III, Bankers Trust aggregated $136,199 for the fiscal year
ended March 31, 1995 and $44,872 for the period October 15, 1993 (commencement
of operations) through March 31, 1994. For the same periods, Bankers Trust
reimbursed $62,017 and $33,838, respectively, to the Portfolio to cover
expenses.
For compensation of investment advisory services provided to the Asset
Management Portfolio II, Bankers Trust aggregated $156,421 for the fiscal year
ended March 31, 1995 and $46,279 for the period from October 14, 1993
(commencement of operations) through March 31, 1994. For the same periods,
Bankers Trust reimbursed $65,748 and $34,192, respectively, to the Portfolio to
cover expenses.
For compensation of investment advisory services provided to the Asset
Management Portfolio , Bankers Trust received $576,146 for the fiscal year ended
March 31, 1995 and $94,329 for the period from September 16, 1993 (commencement
of operations) through March 31, 1994. For the same periods, Bankers Trust
reimbursed $169,159 and $48,572, respectively, to the Portfolio to cover
expenses.
Bankers Trust may have deposit, loan and other commercial banking
relationships with the issuers of obligations which may be purchased on behalf
of the Portfolios, including outstanding loans to such issuers which could be
repaid in whole or in part with the proceeds of securities so purchased. Such
affiliates deal, trade and invest for their own accounts in such obligations and
are among the leading dealers of various types of such obligations. Bankers
Trust has informed the Portfolios that, in making its investment decisions, it
does not obtain or use material inside information in its possession or in the
possession of any of its affiliates. In making investment recommendations for
the Portfolios, Bankers Trust will not inquire or take into consideration
whether an issuer of securities proposed for purchase or sale by a Portfolio is
a customer of Bankers Trust, its parent or its subsidiaries or affiliates and,
in dealing with its customers, Bankers Trust, its parent, subsidiaries and
affiliates will not inquire or take into consideration whether securities of
such customers are held by any fund managed by Bankers Trust or any such
affiliate.
Each Fund's prospectus contains disclosure as to the amount of Bankers
Trust's investment advisory and administration and services fees, including
waivers thereof. Bankers Trust may not recoup any of its waived investment
advisory or administration and services fees. Such waivers by Bankers Trust
shall stay in effect for at least 12 months.
ADMINISTRATOR
Under administration and services agreements, Bankers Trust is obligated on
a continuous basis to provide such administrative services as the Board of
Trustees of the Trust and each Portfolio reasonably deem necessary for the
proper administration of the Trust or a Portfolio. Bankers Trust will generally
assist in all aspects of the Funds' and Portfolios' operations; supply and
maintain office facilities (which may be in Bankers Trust's own offices),
statistical and research data, data processing services, clerical, accounting,
bookkeeping and recordkeeping services (including without limitation the
maintenance of such books and records as are required under the 1940 Act and the
rules thereunder, except as maintained by other agents), internal auditing,
executive and administrative services, and stationery and office supplies;
prepare reports to shareholders or investors; prepare and file tax returns;
supply financial information and supporting data for reports to and filings with
the SEC and various state Blue Sky authorities; supply supporting documentation
for meetings of the Board of Trustees; provide monitoring reports and assistance
regarding compliance with Declarations of Trust, by-laws, investment objectives
and policies and with Federal and state securities laws; arrange for appropriate
insurance coverage; calculate net asset values, net income and realized capital
gains or losses; and negotiate arrangements with, and supervise and coordinate
the activities of, agents and others to supply services.
Pursuant to a sub-administration agreement (the "Sub-Administration
Agreement"), Signature performs such sub-administration duties for the Trust and
the Portfolios as from time to time may be agreed upon by Bankers Trust and
Signature. The Sub-Administration Agreement provides that Signature will receive
such compensation as from time to time may be agreed upon by Signature and
Bankers Trust. All such compensation will be paid by Bankers Trust.
In compensation for administrative and other services provided to the BT
Investment Lifecycle Short Range Fund, Bankers Trust received $136,157 for the
fiscal year ended March 31, 1995 and $44,855 for the period from October 15,
1993 (commencement of operations) through March 31, 1994. During the same
periods, Bankers Trust reimbursed $109,534 and $43,355, respectively, to the
Fund to cover expenses. In compensation for administrative and other services
provided to Asset Management Portfolio III, Bankers Trust received $20,954 and
$6,903 during the same periods.
In compensation for administrative and other services provided to the BT
Investment Lifecycle Mid Range Fund, Bankers Trust received $156,366 for the
fiscal year ended March 31, 1995 and $46,256 for period from October 14, 1993
(commencement of operations) through March 31, 1994. During the same periods,
Bankers Trust reimbursed $116,867 and $44,573, respectively, to the Fund to
cover expenses. In compensation for administrative and other services provided
to Asset Management Portfolio II, Bankers Trust received $24,065 and $7,120
during the same periods.
In compensation for administrative and other services provided to the BT
Investment Lifecycle Long Range Fund, Bankers Trust received $69,865 for the
fiscal year ended March 31, 1995 and $2,175 for the period from November 16,
1993 (commencement of operations) through March 31, 1994. During the same
periods, Bankers Trust reimbursed $77,393 and $18,956, respectively, to the Fund
to cover expenses. In compensation for administrative and other services
provided to Asset Management Portfolio, Bankers Trust received $88,638 for the
fiscal year ended March 31, 1995 and $14,512 for the period from September 16,
1993 (commencement of operations) through March 31, 1994.
Bankers Trust has agreed that if in any fiscal year the aggregate expenses
of any Fund and its respective Portfolio (including fees pursuant to the
Advisory Agreement, but excluding interest, taxes, brokerage and, if permitted
by the relevant state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over a Fund, Bankers Trust
will reimburse the Fund for the excess expense to the extent required by state
law. As of the date of this Statement of Additional Information, the most
restrictive annual expense limitation applicable to any Fund is 2.50% of the
Fund's first $30 million of average annual net assets, 2.00% of the next $70
million of average annual net assets and 1.50% of the remaining average annual
net assets.
CUSTODIAN AND TRANSFER AGENT
Bankers Trust, 280 Park Avenue, New York, New York 10017, serves as
Custodian for the Trust and for each Portfolio pursuant to the administration
and services agreements. As Custodian, it holds the Funds' and each Portfolio's
assets. Bankers Trust also serves as transfer agent of the Trust and of each
Portfolio pursuant to the respective administration and services agreement.
Under its transfer agency agreement with the Trust, Bankers Trust maintains the
shareholder account records for each Fund, handles certain communications
between shareholders and the Trust and causes to be distributed any dividends
and distributions payable by the Trust. Bankers Trust may be reimbursed by the
Funds or the Portfolios for its out-of-pocket expenses. Bankers Trust will
comply with the self-custodian provisions of Rule 17f-2 under the 1940 Act.
Use of Name
The Trust and Bankers Trust have agreed that the Trust may use "BT" as part
of its name for so long as Bankers Trust serves as investment adviser to the
Portfolios. The Trust has acknowledged that the term "BT" is used by and is a
property right of certain subsidiaries of Bankers Trust and that those
subsidiaries and/or Bankers Trust may at any time permit others to use that
term.
The Trust may be required, on 60 days' notice from Bankers Trust at any
time, to abandon use of the acronym "BT" as part of its name. If this were to
occur, the Trustees would select an appropriate new name for the Trust, but
there would be no other material effect on the Trust, its shareholders or
activities.
Banking Regulatory Matters
Bankers Trust has been advised by its counsel that in its opinion Bankers
Trust may perform the services for the Portfolios contemplated by the investment
advisory agreement and other activities for the Funds and the Portfolios
described in the Prospectus and this Statement of Additional Information without
violation of the Glass-Steagall Act or other applicable banking laws or
regulations. However, counsel has pointed out that future changes in either
Federal or state statutes and regulations concerning the permissible activities
of banks or trust companies, as well as future judicial or administrative
decisions or interpretations of present and future statutes and regulations,
might prevent Bankers Trust from continuing to perform those services for the
Trust and the Portfolios. State laws on this issue may differ from the
interpretations of relevant Federal law and banks and financial institutions may
be required to register as dealers pursuant to state securities law. If the
circumstances described above should change, the Boards of Trustees would review
the relationships with Bankers Trust and consider taking all actions necessary
in the circumstances.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street,
New York, New York 10022-4669, serves as Counsel to the Trust and each
Portfolio. Coopers & Lybrand L.L.P., 1100 Main Street, Suite 900, Kansas City,
Missouri 64105 has been selected as Independent Accountants for the Trust and
each Portfolio.
ORGANIZATION OF THE TRUST
Shares of the Trust do not have cumulative voting rights, which means that
holders of more than 50% of the shares voting for the election of Trustees can
elect all Trustees. Shares are transferable but have no preemptive, conversion
or subscription rights. Shareholders generally vote by Fund, except with respect
to the election of Trustees and the ratification of the selection of independent
accountants.
Massachusetts law provides that shareholders could under certain
circumstances be held personally liable for the obligations of the Trust.
However, the Trust's Declaration of Trust disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of this disclaimer be
given in each agreement, obligation or instrument entered into or executed by
the Trust or a Trustee. The Declaration of Trust provides for indemnification
from the Trust's property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder's incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations, a possibility that the Trust believes is remote. Upon payment of
any liability incurred by the Trust, the shareholder paying the liability will
be entitled to reimbursement from the general assets of the Trust. The Trustees
intend to conduct the operations of the Trust in a manner so as to avoid, as far
as possible, ultimate liability of the shareholders for liabilities of the
Trust.
The Trust was organized under the name BT Tax-Free Investment Trust and
assumed its current name of BT Investment Funds on May 16, 1988.
Whenever the Trust is requested to vote on a matter pertaining to a
Portfolio, the Trust will vote its shares without a meeting of the respective
Fund shareholders if the proposal, if made with respect to such Fund, would not
require the vote of the Fund shareholders as long as such action is permissible
under applicable statutory and regulatory requirements. The Trust will hold a
meeting of the Fund shareholders for all other matters requiring a vote, and the
Trust will cast all of its votes at the meeting of investors in a Portfolio in
the same proportion as the votes of the respective Fund shareholders. Other
investors with a greater pro rata ownership of a Portfolio could have effective
voting control of the operations of the Portfolio.
TAXATION
TAXATION OF THE FUNDS
The Trust intends to qualify annually and to elect each Fund to be treated
as a regulated investment company under the Code.
To qualify as a regulated investment company, each Fund must, among other
things: (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock, securities or foreign currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
sale or other disposition of certain assets (namely, in the case of the Fund:
(i) stock or securities; (ii) options, futures, and forward contracts (other
than those on foreign currencies); and (iii) foreign currencies (including
options, futures, and forward contracts on such currencies) not directly related
to the Fund's principal business of investing in stock or securities (or options
and futures with respect to stocks or securities)) held less than three months
(the "30% Limitation"); (c) diversify its holdings so that, at the end of each
quarter of the taxable year: (i) at least 50% of the market value of the Fund's
assets is represented by cash and cash items (including receivables), U.S.
Government securities, the securities of other regulated investment companies
and other securities, with such other securities of any one issuer limited for
the purposes of this calculation to an amount not greater than 5% of the value
of the Fund's total assets and not greater than 10% of the outstanding voting
securities of such issuer; and (ii) not more than 25% of the value of its total
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies); and (d) distribute at least 90% of its investment company taxable
income (which includes, among other items, dividends, interest and net
short-term capital gains in excess of net long-term capital losses) and its net
tax-exempt interest income, if any, each taxable year.
As a regulated investment company, each Fund will not be subject to U.S.
Federal income tax on its investment company taxable income and net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, that it distributes to shareholders. The Fund intends to
distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and net capital gains. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a nondeductible 4% excise tax. To prevent imposition of the
excise tax, the Fund must distribute during each calendar year an amount equal
to the sum of: (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year; (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses, as prescribed by the Code) for the one-year period ending on October 31
of the calendar year; and (3) any ordinary income and capital gains for previous
years that was not distributed during those years. A distribution will be
treated as paid on December 31 of the current calendar year if it is declared by
the Fund in October, November or December with a record date in such a month and
paid by the Fund during January of the following calendar year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received. To prevent application of the excise tax, the Fund
intends to make its distributions in accordance with the calendar year
distribution requirement.
Each Fund shareholder will also receive, if appropriate, various written
notices after the close of the Fund's prior taxable year as to the Federal
income status of his dividends and distributions which were received from the
Fund during the Fund's prior taxable year.
FOREIGN SECURITIES
Tax conventions between certain countries and the United States may reduce
or eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Portfolio's assets to be invested
in various countries will vary.
If the Portfolio is liable for foreign taxes, and if more than 50% of the
value of the Portfolio's total assets at the close of its taxable year consists
of stocks or securities of foreign corporations, it may make an election
pursuant to which certain foreign taxes paid by it would be treated as having
been paid directly by shareholders of the entities, such as the Fund, which have
invested in the Portfolio. Pursuant to such election, the amount of foreign
taxes paid will be included in the income of the Fund's shareholders, and such
Fund shareholders (except tax-exempt shareholders) may, subject to certain
limitations, claim either a credit or deduction for the taxes. Each such Fund
shareholder will be notified after the close of the Portfolio's taxable year
whether the foreign taxes paid will "pass through" for that year and, if so,
such notification will designate (a) the shareholder's portion of the foreign
taxes paid to each such country and (b) the portion which represents income
derived from sources within each such country.
The amount of foreign taxes for which a shareholder may claim a credit in
any year will generally be subject to a separate limitation for "passive
income," which includes, among other items of income, dividends, interest and
certain foreign currency gains. Because capital gains realized by the Portfolio
on the sale of foreign securities will be treated as U.S.-source income, the
available credit of foreign taxes paid with respect to such gains may be
restricted by this limitation.
DISTRIBUTIONS
Dividends paid out of the Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. Distributions of net capital
gains, if any, designated as capital gain dividends are taxable as long-term
capital gains, regardless of how long the shareholder has held the Fund's
shares, and are not eligible for the dividends-received deduction. Shareholders
receiving distributions in the form of additional shares, rather than cash,
generally will have a cost basis in each such share equal to the net asset value
of a share of the Fund on the reinvestment date. Shareholders will be notified
annually as to the U.S. Federal tax status of distributions.
TAXATION OF THE PORTFOLIOS
The Portfolios are not subject to Federal income taxation. Instead, the
Fund and other investors investing in a Portfolio must take into account, in
computing their Federal income tax liability, their share of the Portfolio's
income, gains, losses, deductions, credits and tax preference items, without
regard to whether they have received any cash distributions from the Portfolio.
Distributions received by a Fund from the corresponding Portfolio generally
will not result in the Fund recognizing any gain or loss for Federal income tax
purposes, except that: (1) gain will be recognized to the extent that any cash
distributed exceeds the Fund's basis in its interest in the Portfolio prior to
the distribution; (2) income or gain may be realized if the distribution is made
in liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio; and
(3) loss may be recognized if the distribution is made in liquidation of the
Fund's entire interest in the Portfolio and consists solely of cash and/or
unrealized receivables. A Fund's basis in its interest in the corresponding
Portfolio generally will equal the amount of cash and the basis of any property
which the Fund invests in the Portfolio, increased by the Fund's share of income
from the Portfolio, and decreased by the amount of any cash distributions and
the basis of any property distributed from the Portfolio.
SALE OF SHARES
Any gain or loss realized by a shareholder upon the sale or other
disposition of shares of the Fund, or upon receipt of a distribution in complete
liquidation of a Fund, generally will be a capital gain or loss which will be
long-term or short-term, generally depending upon the shareholder's holding
period for the shares. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced (including shares
acquired pursuant to a dividend reinvestment plan) within a period of 61 days
beginning 30 days before and ending 30 days after disposition of the shares. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized by a shareholder on a disposition of Fund
shares held by the shareholder for six months or less will be treated as a
long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
FOREIGN WITHHOLDING TAXES
Income received by a Portfolio from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.
BACKUP WITHHOLDING
A Fund may be required to withhold U.S. Federal income tax at the rate of
31% of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Corporate shareholders and certain other
shareholders specified in the Code generally are exempt from such backup
withholding. Backup withholding is not an additional tax. Any amounts withheld
may be credited against the shareholder's U.S. Federal income tax liability.
FOREIGN SHAREHOLDERS
The tax consequences to a foreign shareholder of an investment in a Fund
may be different from those described herein. Foreign shareholders are advised
to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in a Fund.
OTHER TAXATION
The Trust is organized as a Massachusetts business trust and, under current
law, neither the Trust nor any Fund is liable for any income or franchise tax in
the Commonwealth of Massachusetts, provided that the Fund continues to qualify
as a regulated investment company under Subchapter M of the Code. The investment
by each Fund in the corresponding Portfolio does not cause the Fund to be liable
for any income or franchise tax in the State of New York.
Each Portfolio is organized as a New York trust. Each Portfolio is not
subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts.
Fund shareholders may be subject to state and local taxes on their Fund
distributions. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund.
FINANCIAL STATEMENTS
The following financial statements for the Funds and Portfolios are
incorporated herein by reference from the annual reports dated March 31, 1995,
copies of which are attached hereto:
BT Investment Lifecycle Short Range Fund
Statement of Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March 31, 1995 and
for the period October 15, 1993 (commencement of operations) to March 31,
1994
Financial Highlights: Selected data , return and ratios for the periods
indicated
Notes to Financial Statements
Report of Independent Accountants
Asset Management Portfolio III
Statement of Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March 31, 1995 and
for the period October 15, 1993 (commencement of operations) to March 31,
1994
Financial Highlights: Selected ratios and supplemental data for the periods
indicated
Schedule of Portfolio of Investments, March 31, 1995
Notes to Financial Statements
Report of Independent Accountants
BT Investment Lifecycle Mid Range Fund
Statement of Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March 31, 1995 and
for the period October 14, 1993 (commencement of operations) to March 31,
1994
Financial Highlights: Selected data , return and ratios for the periods
indicated
Notes to Financial Statements
Report of Independent Accountants
Asset Management Portfolio II
Statement of Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March 31, 1995 and
for the period October 14, 1993 (commencement of operations) to March 31,
1994
Financial Highlights: Selected ratios and supplemental data for the periods
indicated
Schedule of Portfolio of Investments, March 31, 1995
Notes to Financial Statements
Report of Independent Accountants
BT Investment Lifecycle Long Range Fund
Statement of Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March 31, 1995 and
for the period November 16, 1993 (commencement of operations) to March 31,
1994
Financial Highlights: Selected data , return and ratios for the periods
indicated
Notes to Financial Statements
Report of Independent Accountants
Asset Management Portfolio
Statement of Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March 31, 1995 and
for the period September 16, 1993 (commencement of operations) to March 31,
1994
Financial Highlights: Selected data , return and ratios for the periods
indicated
Schedule of Portfolio of Investments, March 31, 1995
Notes to Financial Statements
Report of Independent Accountants
<PAGE>
APPENDIX
BOND AND COMMERCIAL PAPER RATINGS
Set forth below are descriptions of ratings which represent opinions as to the
quality of the securities . It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
-edged". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safe-guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
MOODY'S INVESTORS SERVICE, INC.'S SHORT-TERM DEBT RATINGS
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
one year.
Issuers rated PRIME-1 or P-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 or P-1
repayment ability will often be evidenced by many of the following
characteristics:
-- Leading market positions in well established industries. High rates of
return on funds employed.
-- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-- Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 or P-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP'S CORPORATE BOND RATINGS
INVESTMENT GRADE
AAA: Debt rated AAA has the highest rating assigned by S&P's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
SPECULATIVE GRADE
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal.
BB indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating.
C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR Bonds may lack a S&P's rating because no public rating has been requested,
because there is insufficient information on which to base a rating, or because
S&P's does not rate a particular type of obligation as a matter of policy.
STANDARD & POOR'S RATINGS GROUP'S COMMERCIAL PAPER RATINGS
A: S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.
A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
FITCH INVESTORS SERVICE, INC. BOND RATINGS
INVESTMENT GRADE
AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+".
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
HIGH YIELD GRADE
BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC: Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default of interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.
PLUS (+) OR MINUS (-): The ratings from AA to C may be modified by the addition
of a plus or minus sign to indicate the relative position of a credit within the
rating category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a
project or the occurrence of a specific event.
FITCH INVESTORS SERVICE, INC. SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+".
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as the
"F-1+" and "F-1" categories.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate, however,
near-term adverse changes could cause these securities to be rated below
investment grade.
DUFF & PHELPS BOND RATINGS
INVESTMENT GRADE
AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AND AA-: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
A+, A, AND A-: Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.
BBB+, BBB, AND BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
HIGH YIELD GRADE
BB+, BB, AND BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.
B+, B, AND B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or into
a higher or lower rating grade.
CCC: Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
Preferred stocks are rated on the same scale as bonds but the preferred rating
gives weight to its more junior position in the capital structure. Structured
financings are also rated on this scale.
DUFF & PHELPS PAPER/CERTIFICATES OF DEPOSIT RATINGS
CATEGORY 1: TOP GRADE
Duff 1 plus: Highest certainty of timely payment. Short-term liquidity including
internal operating factors and/or ready access to alternative sources of funds,
is outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
DUFF 1: Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
DUFF 1 MINUS: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
CATEGORY 2: GOOD GRADE
DUFF 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
CATEGORY 3: SATISFACTORY GRADE
DUFF 3: Satisfactory liquidity and other protection factors qualify issue as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless timely payment is expected.
No ratings are issued for companies whose paper is not deemed to be of
investment grade.
* * * * *
Bonds which are unrated expose the investor to risks with respect to capacity to
pay interest or repay principal which are similar to the risks of lower-rated
bonds. The Fund is dependent on the investment adviser's or investment
subadviser's judgment, analysis and experience in the evaluation of such bonds.
Investors should note that the assignment of a rating to a bond by a rating
service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.
NOTE:
1 The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such
ratings, they undertake no obligation to do so, and the ratings indicated do
not necessarily represent ratings which would be given to these securities
on the date of the Fund's fiscal year end.
<PAGE>
DISTRIBUTOR
Signature Broker-Dealer
Services, Inc. BT INVESTMENT FUNDS
6 St. James Avenue
Boston, MA 02116
(617) 423-0800
INVESTMENT ADVISER OF EACH PORTFOLIO o BT Investment Lifecycle Long Range Fund
o BT Investment Lifecycle Mid Range Fund
Bankers Trust Company o BT Investment Lifecycle Short Range Fund
280 Park Avenue
New York, NY 10017
TRANSFER AGENT
Bankers Trust Company
280 Park Avenue
New York, NY 10017
CUSTODIAN
Bankers Trust Company STATEMENT OF
280 Park Avenue ADDITIONAL INFORMATION
New York, NY 10015 AUGUST 1, 1995
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1100 Main Street, Suite 900
Kansas City, MO 64105
LEGAL COUNSEL
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4669
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The following are included in Part B:
BT Investment Funds - Latin American Equity Fund, Global High Yield Securities
Fund, Pacific Basin Equity Fund, BT Investment Portfolios - Latin American
Equity Portfolio Global High Yield Securities Portfolio and Pacific Basin Equity
Portfolio
Statement of Assets and Liabilities, September 30, 1994
Statement of Operations for the period indicated
Statement of Changes in Net Assets for the period indicated
Financial Highlights: Selected data returns and ratios for the
periods indicated
Notes to Financial Statements
Report of Independent Accountants
BT Investment Funds - Short/Intermediate U.S. Government Securities Fund,
Intermediate Tax Free Fund, Utility Fund, Capital Appreciation Fund,
International Equity Fund, Cash Management Fund, Liquid Assets Fund, Treasury
Money Fund, Tax Free Money Fund and NY Tax Free Money Fund
Statement of Assets and Liabilities, December 31, 1994
Statement of Operations for the period indicated
Statement of Changes in Net Assets for each of the periods indicated
Financial Highlights: Selected data for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
BT Investment Portfolios - Short/Intermediate U.S. Government Securities
Portfolio, Intermediate Tax Free Portfolio, Utility Portfolio, Capital
Appreciation Portfolio, International Equity Portfolio, Cash Management
Portfolio, Liquid Assets Portfolio, Treasury Money Portfolio, Tax Free Money
Portfolio and NY Tax Free Money Portfolio
Statement of Assets and Liabilities, December 31, 1994
Statement of operations for the period indicated
Statement of Changes in Net Assets for each of the periods indicated
Financial Highlights: Selected ratios and supplemental data for each
of the periods indicated
Schedule of Portfolio Investments, December 31, 1994
Notes to Financial Statements
Report of Independent Accountants
BT Investment Funds - BT Investment Lifecycle Short Range Fund
Statementof Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March
31, 1995 and for the period October 15, 1993 (commencement of
operations) to March 31, 1994
Financial Highlights: Selected data, return and ratios for the
periods indicated
Notes to Financial Statements
Report of Independent Accountants
BT Investment Portfolios - Asset Management Portfolio III
Statementof Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March
31, 1995 and for the period October 15, 1993 (commencement of
operations) to March 31, 1994
Financial Highlights: Selected ratios and supplemental data for the
periods indicated
Schedule of Portfolio of Investments, March 31, 1995
Notes to Financial Statements
Report of Independent Accountants
BT Investment Funds - BT Investment Lifecycle Mid Range Fund
Statementof Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March
31, 1995 and for the period October 14, 1993 (commencement of
operations) to March 31, 1994
Financial Highlights: Selected data, return and ratios for the periods
indicated
Notes to Financial Statements
Report of Independent Accountants
BT Investment Portfolios - Asset Management Portfolio II
Statementof Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March
31, 1995 and for the period October 14, 1993 (commencement of
operations) to March 31, 1994
Financial Highlights: Selected ratios and supplemental data for the
periods indicated
Schedule of Portfolio of Investments, March 31, 1995
Notes to Financial Statements
Report of Independent Accountants
BT Investment Funds - BT Investment Lifecycle Long Range Fund
Statementof Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March
31, 1995 and for the period November 16, 1993 (commencement of
operations) to March 31, 1994
Financial Highlights: Selected data, return and ratios for the periods
indicated
Notes to Financial Statements
Report of Independent Accountants
Asset Management Portfolio
Statementof Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March
31, 1995 and for the period September 16, 1993 (commencement
of operations) to March 31, 1994
Financial Highlights: Selected data, return and ratios for the periods
indicated
Schedule of Portfolio of Investments, March 31, 1995
Notes to Financial Statements
Report of Independent Accountants
(b) Exhibits:
(1) (a) Declaration of Trust of the Trust.8
(b) Supplement to Declaration of Trust.8
(c) Second Supplement to Declaration of Trust.8
(2) By-Laws of the Trust.8
(3) Not applicable.
(4) Specimen stock certificates for shares of beneficial interest of
the Trust.1
(5) Not applicable.
(6) Distribution Agreement.7
(7) Not applicable.
(8) See Exhibit 9(b).
(9) (a) See Exhibit 9(b).
(b) Administration and Services Agreement.6
(c) Schedule of Fees under Administration and
Services Agreement7
(10) Not applicable.
(11) Consents of independent accountants.8
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Plan of Distribution pursuant to Rule 12b-l under the Investment
Company Act of 1940, as amended (the "1940 Act").5
(16) Schedules for Computation of Performance Quotations.2
(17) Financial Data Schedules with respect to Asset Management
Portfolio, Asset Management Portfolio II, Asset Management
Portfolio III, BT Investment Lifecycle Short Range Fund, BT
Investment Lifecycle Mid Range Fund and BT Investment Lifecycle
Long Range Fund.8
(17A) Powers of Attorney.3
(17B) Powers of Attorney for the Trustees of the Portfolios.4
--------------
1 Incorporated herein by reference from this Registration Statement
as filed with the Securities and Exchange Commission (the "SEC")
on October 24, 1986.
2 Incorporated herein by reference from Post-Effective Amendment
No. 14 to this Registration Statement as filed with the SEC on
February 13, 1992.
3 Incorporated herein by reference from Post-Effective Amendment
No. 16 to this Registration Statement as filed with the SEC on
April 30, 1992.
4 Incorporated herein by reference from Post-Effective Amendment
No. 20 to this Registration Statement as filed with the SEC on
October 9, 1992.
5 Incorporated herein by reference from Post-Effective Amendment
No. 22 to this Registration Statement as filed with the SEC on
February 26, 1993.
6 Incorporated herein by reference from Post-Effective Amendment
No. 23 to this Registration Statement as filed with the SEC on
April 30, 1993.
7 Incorporated herein by reference from Post-Effective Amendment
No. 29 to this Registration Statement as filed with the SEC on
November 8, 1993.
8 Incorporated herein by reference from Post-Effective Amendment
No. 33 to this Registration Statement as filed with the SEC on
April 28, 1995.
12 Filed herein.
Item 25. Persons Controlled by or Under Common Control with the Trust.
Not applicable.
Item 26. Number of Holders of Securities.
Number of Record Holders
Title of Class (as of April 20,1995)
BT Investment Tax Free Money Fund 162
BT Investment NY Tax Free Money Fund 227
BT Investment Cash Management Fund 273
BT Investment Liquid Assets Fund 146
BT Investment Treasury Money Fund 1,736
BT Investment 100% Treasury Fund 0
BT Investment Short/Intermediate U.S. Government Securities Fund 187
BT Investment Intermediate Tax Free Fund 89
BT Investment Utility Fund 124
BT Investment Small Cap Fund 145
BT Investment Pacific Basin Equity Fund 133
BT Investment European Equity Fund 0
BT Investment Lifecycle Short Range Fund 8
BT Investment Lifecycle Mid Range Fund 8
BT Investment Lifecycle Long Range Fund 10
BT Investment Latin American Equity Fund 113
BT Investment International Equity Fund 159
BT Investment Global High Yield Securities Fund 53
BT Investment Capital Appreciation Fund 202
BT Investment International Bond Fund 0
Item 27. Indemnification.
Under Article XI, Section 2 of the Trust's Declaration of Trust, any past
or present Trustee or officer of the Trust (including persons who serve at
the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder,
creditor or otherwise [hereinafter referred to as a "Covered Person"]) is
indemnified to the fullest extent permitted by law against liability and
all expenses reasonably incurred by him in connection with any action,
suit or proceeding to which he may be a party or otherwise involved by
reason of his being or having been a Covered Person. This provision does
not authorize indemnification when it is determined, in the manner
specified in the Declaration of Trust, that such Covered Person has not
acted in good faith in the reasonable belief that his actions were in or
not opposed to the best interests of the Trust. Moreover, this provision
does not authorize indemnification when it is determined, in the manner
specified in the Declaration of Trust, that such Covered Person would
otherwise be liable to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his
duties. Expenses may be paid by the Trust in advance of the final
disposition of any action, suit or proceeding upon receipt of an
undertaking by such Covered Person to repay such expenses to the Trust in
the event that it is ultimately determined that indemnification of such
expenses is not authorized under the Declaration of Trust and either (i)
the Covered Person provides security for such undertaking, (ii) the Trust
is insured against losses from such advances or (iii) the disinterested
Trustees or independent legal counsel determines, in the manner specified
in the Declaration of Trust, that there is reason to believe the Covered
Person will be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the 1933 Act may be
permitted to Trustees, officers and controlling persons of the Trust
pursuant to the foregoing provisions, or otherwise, the Trust has been
advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Trust of expenses incurred or
paid by a Trustee, officer or controlling person of the Trust in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities
being registered, the Trust will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the 1933 Act and will be governed
by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
Not applicable.
Item 29. Principal Underwriters.
(a) Signature Broker-Dealer Services, Inc. is the Distributor (the
"Signature") for the shares of BT Investment Funds. Signature also
serves as the principal underwriter or placement agent for other
registered investment companies.
(b) Set forth below are the names, principal business addresses and
positions of each director and officer of Signature. Unless otherwise
noted, the principal business address of these individuals is
Signature Broker-Dealer Services, Inc., 6 St. James Avenue, Boston,
Massachusetts 02116. Unless otherwise specified, none of the officers
and directors of Signature serve as officers and Trustees of the
Trust.
Position and Offices Position and Offices
Name with Signature with the Registrant
Philip W. Coolidge Chief Executive President and Trustee
Officer, President
and Director
James B. Craver Secretary and Secretary and Treasurer
Senior Vice President
Linwood C. Downs Treasurer --
Thomas M. Lenz Assistant Secretary Assistant Secretary
Molly S. Mugler Assistant Secretary Assistant Secretary
Linda T. Gibson Assistant Secretary Assistant Secretary
Andres E. Saldana Assistant Secretary Assistant Secretary
Susan Jakuboski Assistant Treasurer --
Position and Offices Position and Offices
Name with Signature with the Registrant
Barbara M. O'Dette Assistant Treasurer Assistant Treasurer
Beth A. Remy Assistant Treasurer --
David G. Danielson -- Assistant Treasurer
James S. Lelko, Jr. -- Assistant Treasurer
Daniel E. Shea -- Assistant Treasurer
Julie J. Wyetzner Product Management
Officer --
Christopher W. Tomecek Director and Senior --
Vice President
Robert G. Davidoff Director --
CMNY Capital, L.P
135 East 57th Street
New York, NY 10022
Kate B.M. Bolsover Director --
Signature Financial
Group (Europe), Ltd.
49 St. James's Street
London SW1A 1JT
Donald S. Chadwick Director --
Scarborough & Company
110 East 42nd Street
New York, NY 10017
Leeds Hackett Director --
National Credit
Management Corporation
10155 York Road
Cockeysville, MD 21030
Laurence E. Levine Director --
First International
Capital, Ltd.
130 Sunrise Avenue
Palm Beach, FL 33480
(c) Inapplicable.
Item 30. Location of Accounts and Records.
BT Investment Funds
6 St. James Avenue
Boston, MA 02116
Bankers Trust Company
4 Albany Street
New York, NY 10006
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report, with respect to the respective series of the Trust, to
shareholders upon request and without charge.
(b) The Registrant undertakes to comply with Section 16(c) of the 1940 Act
as though such provisions of the Act were applicable to the Registrant
except that the request referred to in the third full paragraph
thereof may only be made by shareholders who hold in the aggregate at
least 10% of the outstanding shares of the Registrant, regardless of
the net asset value or values of shares held by such requesting
shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the 1933 Act and the Investment Company
Act of 1940, as amended, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the 1933 Act and that it has duly caused this Amendment to
Registrant's Registration Statement on Form N-1A to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 31st day of July, 1995.
BT INVESTMENT FUNDS
By: /S/PHILIP W. COOLIDGE
-------------------------
Philip W. Coolidge
President
Pursuant to the requirements of the 1933 Act, this Amendment has been
signed below by the following persons in the capacities indicated on July 31,
1995.
Signature Title
/S/PHILIP W. COOLIDGE President and Trustee
-----------------------------
Philip W. Coolidge
KELVIN J. LANCASTER* Trustee
-----------------------------
Kelvin J. Lancaster
PHILIP SAUNDERS, JR.* Trustee
-----------------------------
Philip Saunders, Jr.
/S/JAMES B. CRAVER Treasurer (Principal Financial and
----------------------------- Principal Accounting Officer)
James B. Craver
*By: /S/JAMES B. CRAVER
-----------------------
James B. Craver
as Attorney-in-Fact pursuant to
a Power of Attorney previously filed.
<PAGE>
SIGNATURES
Asset Management Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of BT Investment Funds (File No. 33-7404) to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston and the Commonwealth of Massachusetts on the 31st day of July,
1995.
ASSET MANAGEMENT PORTFOLIO
By: /S/PHILIP W. COOLIDGE
-----------------------------
Philip W. Coolidge
President
This Amendment to the Registration Statement on Form N-1A of BT
Investment Funds (File No. 33-7404) has been signed below by the following
persons in the capacities indicated on July 31, 1995.
Signature Title
/S/PHILIP W. COOLIDGE Trustee and President of Asset
----------------------------- Management Portfolio
Philip W. Coolidge
CHARLES P. BIGGAR* Trustee of Asset Management Portfolio
-----------------------------
Charles P. Biggar
S. LELAND DILL* Trustee of Asset Management
----------------------------- Portfolio
S. Leland Dill
/S/JAMES B. CRAVER Treasurer (Principal Financial and
----------------------------- Principal Accounting Officer) of
James B. Craver Asset Management Portfolio
*By: /S/JAMES B. CRAVER
-----------------------
James B. Craver
as Attorney-in-Fact pursuant to a
Power of Attorney previously filed.
<PAGE>
SIGNATURES
BT Investment Portfolios has duly caused this Amendment to the
Registration Statement on Form N-1A of BT Investment Funds (File No. 33-7404) to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston and the Commonwealth of Massachusetts on the 31st day of July,
1995.
BT INVESTMENT PORTFOLIOS
By: /S/PHILIP W. COOLIDGE
----------------------------
Philip W. Coolidge
President
This Amendment to the Registration Statement on Form N-1A of BT
Investment Funds (File No. 33-7404) has been signed below by the following
persons in the capacities indicated on July 31, 1995.
Signature Title
/S/PHILIP W. COOLIDGE Trustee and President of BT
----------------------------- Investment Portfolios
Philip W. Coolidge
CHARLES P. BIGGAR* Trustee of BT Investment
----------------------------- Portfolios
Charles P. Biggar
S. LELAND DILL* Trustee of BT Investment
----------------------------- Portfolios
S. Leland Dill
/S/JAMES B. CRAVER Treasurer (Principal Financial and
----------------------------- Principal Accounting Officer) of
James B. Craver BT Investment Portfolios
*By: /S/JAMES B. CRAVER
-----------------------
James B. Craver
as Attorney-in-Fact pursuant to a
Power of Attorney
previously filed.
<PAGE>
BT INVESTMENT FUNDS
EXHIBITS TO
REGISTRATION STATEMENT
ON FORM N-1A
EXHIBIT INDEX
Exhibit No. Page
(1) (a) Declaration of Trust of the Trust.
(b) Supplement to Declaration of Trust.
(c) Second Supplement to Declaration of Trust.
(2) By-Laws of the Trust.
(11) Consents of independent accountants.
(17) Financial Data Schedules with respect to Asset Management
Portfolio, Asset Management Portfolio II, Asset Management
Portfolio III, BT Investment Lifecycle Short Range Fund, BT
Investment Lifecycle Mid Range Fund and BT Investment Lifecycle
Long Range Fund.
REFERENCE SHEET
Pursuant to CMR 116.03:
Name of Trust:
BT TAX-FREE INVESTMENT TRUST
Date of Organization:
July 21, 1986
Name and Address of Trustees:
Eugene J. Glaser
Richard J. Capalbo
60 Broad Street
New York New, York 10004
Original Signatures of All Trustees:
See last page of this document.
Principal Place of Business:
60 Broad Street
New York, New York 10004
Agent for Service of Process in Massachusetts:
U.S. Corporation Company One
Court Street Boston, Massachusetts 02108
Copies to:
Eugene J. Glaser Paul S. Schreiber, Esq.
President Kramer, Levin, Nessen,
BT Tax-Free Investment Trust and Kamin & Frankel
60 Broad Street 919 Third Avenue
New York, New York 10004 New York, New York 10022
See Article XII, Section 10, page 51
Statement that beneficial interest is divided into transferable
certificate of shares of beneficial interest:
Article III, Section 1, page 4
Ability to Merge:
Article XII, Section 5, page 47
<PAGE>
DECLARATION OF TRUST
DECLARATION OF TRUST, made July 21, 1986 by the Trustees hereinafter named.
WHEREAS, the trustees at a Meeting held on July 21, 1986, resolved to
establish a trust fund for the investment and reinvestment of funds contributed
thereto; and
WHEREAS, this Declaration of Trust will become effective upon filing with
the Secretary of the Commonwealth of Massachusetts.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder, IN TRUST to manage and dispose of the same upon
the following terms and conditions of the pro rata benefit of the holders from
time to time of shares of any Series in this Trust, as hereinafter set forth.
<PAGE>
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as "BT Tax-Free Investment Trust," and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
DEFINITIONS
Section 2. Wherever used herein, unless otherwise required by the context
or specifically provided.
(a) The terms "Affiliated Person," "Assignment," "Commission," "Interested
Person," "Investment Adviser," "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever
may be applicable) and "Principal Underwriter" shall have the meanings given
them in the 1940 act;
(b) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time;
(c) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust, as amended, supplemented or restated from time to time;
(d) "Net Asset Value" shall mean the net asset value of each Series of the
Trust determined in the manner provided in Article X, Section 4 hereof;
(e) The "1940 Act" shall mean the Investment Company Act of 1940, as
amended from time to time, and the rules, regulations and interpretations
promulgated from time to time thereunder;
(f) "Series" shall mean any series of Shares of the Trust established in
accordance with the provisions of Article III;
( g) "Shareholder" shall mean a record owner of Shares;
(h) "Shares" shall mean the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided from
time to time or, if more than one Series is authorized by the Trustees, the
equal proportionate transferable units into which each Series shall be divided
from time to time, and includes fractions of shares as well as whole shares
consistent with the requirements of Federal and/or other securities laws;
(i) The "Trust" shall mean the Massachusetts business trust established by
this Declaration of Trust, to be known as BT Tax-Free Investment Trust and
reference to the Trust, when applicable to one or more Series of the Trust,
shall refer to any such Series; and
(j) The "Trustees" shall mean the individual trustees of the Trust named
herein or appointed or elected in accordance with Article IV in their capacity
as trustees of the Trust for the time being in office as such trustee or
trustees. ARTICLE II
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investment in securities and to carry on such other business as the
Trustees may from time to time determine pursuant to their authority under this
Declaration of Trust.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall be divided into
Shares of one or more separate and distinct Series as the Trustees shall from
time to time create and establish. Each Share of a Series will represent an
equal proportionate interest in the Series with each other Share of the same
Series, none having priority or preference over another.
The number of authorized Shares shall be unlimited. The Trust may issue
Shares in fractional denominations to the same extent as whole Shares, and
Shares in fractional denominations shall be Shares having proportionately to the
respective fractions represented thereby all the rights of whole Shares.
The Trustees shall have full power and authority, in their sole discretion
and without Shareholder approval, to create and establish any Series by setting
the preference, conversion or other rights, voting powers, restrictions,
limitations or dividends, and qualifications or terms and conditions of, or
rights to require redemption of, any unissued Shares and to take such other
action with respect to the Shares as the Trustees deem desirable and which is
otherwise in accordance with this Declaration of Trust. The Trustees shall have
full power and authority, in their sole discretion and without Shareholder
approval, to establish or change from time to time the par value of Shares as
the Board shall determine, provided the rights of outstanding Shares shall not
thereby be impaired in any material way. The Trustees may divide or combine the
Shares from time to time into a greater or lesser number without thereby
changing the proportionate beneficial interests in the Series of Shares so
divided or combined.
ESTABLISHMENT AND ABOLISHMENT OF SERIES
Section 2. The establishment of any Series shall be effective upon the
adoption of a resolution by the Trustees setting forth such establishment and
designating the relative rights and preferences of the Shares of such Series. At
any time that there are no Shares outstanding of any particular Series
previously established and designated, the Trustees may abolish such Series and
the establishment and designation thereof.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded in the books of the
Trust or a transfer or similar agent. No certificates certifying the ownership
of Shares shall be issued except as the Trustees may otherwise determine from
time to time. The Trustees may make such rules as they consider appropriate for
the issuance of Share certificates, the transfer of Shares and similar matters.
The record books of the Trust as kept by the Trust or any transfer or similar
agent, as the case may be, shall be conclusive as to the Shareholders of each
Series and as to the number of Shares of each Series held from time to time by
each Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees may issue Shares on such terms and for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as they may from time to time authorize. Such Shares, when
so issued, shall be fully paid and non-assessable.
ASSETS AND LIABILITIES OF SERIES
Section 5. All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition, any assets,
income, earnings, profits, and proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Series shall be allocated by
the Trustees between and among one or more of the Series in such manner as they,
in their sole discretion, deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series for all purposes, and
shall be referred to as assets belonging to that Series. The assets belonging to
a particular Series shall be so recorded upon the books of the Trust, and shall
be held by the Trustees in Trust for the benefit of the holders of Shares of
that Series. The assets belonging to each particular Series shall be charged
with the liabilities of that Series and all expenses, costs, charges and
reserves attributable to that Series. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as arising
from any particular Series shall be allocated and charged by the Trustees
between or among any one or more of the Series in such manner as the Trustees,
in their sole discretion, deem fair and equitable, and shall be referred to as
"liabilities belonging to" that Series. Each such allocation shall be conclusive
and binding upon the Shareholders of all Series for all purposes. Any creditor
of any Series may look only to the assets of that Series to satisfy such
creditor's debt.
NO PREEMPTIVE RIGHTS
Section 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust or
the Trustees.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 7. Shares shall be deemed to be personal property giving only the
rights provided in this Declaration of Trust. All persons acquiring Shares shall
acquire the same subject to the provisions of this Declaration of Trust and the
Bylaws established hereunder as in effect from time to time, and by virtue of
having become a Shareholder, shall be held to have expressly assented and agreed
to the terms hereof and to have become a party hereto. No Shareholder shall be
deemed to have a severable ownership in any individual asset of the Trust or any
right of partition or possession thereof or to an accounting thereof, but each
Shareholder shall have a proportionate undivided beneficial interest in the
Trust. The death of a Shareholder during the continuance of the Trust shall not
operate to terminate the same nor entitle the representative of any deceased
Shareholder to an accounting or to take any action in court or elsewhere against
the Trust or Trustees, but shall entitle the representative only to the rights
of said decedent under this Trust.
Neither the Trust nor the Trustees, nor any officer, employee or agent of
the Trust, shall have any power to bind any Shareholder personally or, except as
specifically provided herein, to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay by way of subscription for any Shares or
otherwise. Every note, bond, contract or other undertaking issued by or on
behalf of the Trust or the Trustees relating to the Trust shall include a
recitation limiting the obligation represented thereby to the Trust and its
assets (but the omission of such a recitation shall not operate to bind any
Shareholder).
ARTICLE IV
THE TRUSTEES
INITIAL TRUSTEES, NUMBER OF TRUSTEES AND ELECTION
Section 1. The number of Trustees shall be as provided in the Bylaws or as
fixed from time to time by the Trustees. A Trustee shall not be required to be a
Shareholder. The Shareholders may elect Trustees at any meeting of Shareholders
called by the Trustees for that purpose.
TERM OF OFFICE OF TRUSTEES
Section 2. Each Trustee shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided or, if sooner, until
the next meeting of Shareholders called for the purpose of electing Trustees and
the election and qualification of his successor; except that (a) any Trustee may
resign his trust by written instrument signed by him and delivered to the
President of the Trust, with notice thereof by regular mail to all the Trustees,
which resignation shall take effect upon such delivery or upon such later date
as is specified therein; (b) any Trustee may be removed at any time by written
instrument, signed by at least two-thirds of the number of Trustees prior to
such removal, specifying the date when such removal shall become effective; (c)
any Trustee who requests in writing to be retired or who has become
incapacitated by illness or injury may be retired by written instrument signed
by a majority of the other Trustees, specifying the date of his retirement; and
(d) any Trustee may be removed at any Special Meeting of the Trust by a vote of
two-thirds of the outstanding Shares.
APPOINTMENT OF TRUSTEES
Section 3. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a vacancy
shall, by reason of an increase in number or for any other reason exist, the
remaining Trustees shall fill such vacancy by appointing such other person as
they, in their discretion, shall see fit consistent with the limitations under
the 1940 Act. Within three months of such appointment, the Trustees shall cause
notice of such appointment to be mailed to each Shareholder at his address as
recorded on the books of the Trust. An appointment of a Trustee may be made by
the Trustees then in office and notice thereof mailed to Shareholders as
aforesaid in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted this Trust,
the Trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder. The power of appointment is subject to the
provisions of Section 16(a) of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
Section 4. Any Trustee may, by power of attorney, delegate his power for a
period not exceeding six months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
VACANCY IN BOARD OF TRUSTEES
Section 5. Whenever a vacancy on t he Board of Trustees shall occur and
until such vacancy is filled, or while any Trustee is physically or mentally
incapacitated by reason of disease or otherwise, the other Trustees shall have
all the powers hereunder and the certificate of the other Trustees of such
vacancy or incapacity shall be conclusive, provided, however, that no vacancy
shall remain unfulfilled for a period longer than six calendar months.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 6. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not operate
to annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 7. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee hereunder
by the Trustees. All of the assets of the Trust shall at all times be considered
as vested in the Trustees.
ARTICLE V
POWERS OF THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed under the
direction of the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility.
POWERS
Section 2. The Trustees, in all instances, shall act as principals, and are
and shall be free from the control of the Shareholders. The Trustees shall have
full power and authority to do any and all acts and to make and execute any kind
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust or any Series. The
Trustees shall not in any way be bound or limited by present or future laws or
customs in regard to Trust investments, but shall have full authority and power
to make any and all investments which they, in their uncontrolled discretion,
shall deem proper to accomplish the purpose of this Trust. Without limiting the
foregoing, the Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested without in any event being bound or limited by any
present or future law or custom in regard to investments by Trustees;
(b) To sell (subject to the provisions of Article XII, Section 5(b)),
exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or
all of the assets of the Trust;
(c) To borrow funds;
(d) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders;
(e) To elect and remove such officers and appoint and terminate such agents
as they consider appropriate;
(f) To employ a bank or trust company as custodian of any assets of the
Trust subject to any conditions set forth in this Declaration of Trust or in the
Bylaws, if any;
(g) To retain a transfer agent and shareholder servicing agent, or both;
(h) To employ an Investment Advisor or Investment Advisers to perform
services pursuant to investment advisory or management contract(s) as
hereinafter provided;
(i) To provide for the distribution of interests of the Trust either
through a Principal Underwriter (hereinafter defined) in the manner herein,
provided for or by the Trust itself, or both;
(j) To delegate the performance of such obligations and responsibilities,
and the exercise of such authority, as they consider desirable, to any officers
of the Trust and to any agent, custodian, Investment Adviser, or Principal
Underwriter;
(k) To establish separate and distinct Series of Shares with separately
defined investment objectives and policies, and distinct investment purposes, in
accordance with the provisions of Article III hereof;
(l) To allocate assets, liabilities and expenses of the Trust to a
particular Series or to apportion the same between or among two or more Series;
provided that any liabilities or expenses belonging to a particular Series,
shall be payable solely out of the assets belonging to that Series as provided
for in Article III hereof;
(m) To make distributions of income and of capital gains to Shareholders in
the manner hereinafter provided for;
(n) To set record dates in the manner hereinafter provided for;
(o) To establish, from time to time, a minimum Share purchase requirement,
and to require the redemption of the Shares of any Shareholder whose investment
is less than an established minimum selected by the Trustees, upon notice to
each such Shareholder;
(p) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to executive and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem appropriate;
(q) To exercise power and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(r) To hold any security or property in a form not in indicating any trust,
whether in bearer, unregistered or other negotiable form, or either in the name
of the Trust or in the name of a custodian or a nominee or nominees, subject in
either case to proper safeguards approved by the Trustees;
(s) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporate nor concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern; and to pay calls or
subscriptions with respect to any security held in the Trust;
(t) To join with other security holders in acting through a committee
depository, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depository or
trustee, and to delegate to any of the foregoing such powers and authorities
with relation to any security (whether or not so deposited or transferred) as
the Trustees shall deem proper, and to agree to pay, and to pay, such portion of
the expenses and compensation of such committee, depository or trustee as the
Trustees shall deem proper;
(u) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(v) To enter into joint ventures, general or limited partnerships and any
other combination or associations;
(w) To endorse or guarantee the payment of any notes or other obligations
of any person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property or
any part thereof to secure any of or all such obligations;
(x) Entirely from Trust property, to purchase and pay for such insurance as
they may deem necessary or appropriate for the conduct of the Trust, including,
without limitation, insurance policies insuring the assets of the Trust and
payment of distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, Investment Advisers or managers, Principal Underwriters or independent
contractors of the Trust, individually or jointly, against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such person as Shareholder, Trustee, officer, employee,
agent, Investment Adviser or manager, Principal Underwriter or independent
contractors, including any action taken or omitted that may be determined to
constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability;
(y) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust; and
(z) To engage in any other lawful activity in which trusts organized under
Massachusetts General Laws, Chapter 182, or any successor statute thereto, may
engage.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 3. Any Trustee, officer or other agent of the Trust may acquire,
own and dispose of Shares to the same extent as if he were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued and
sold Shares to and buy such Shares from any such person or any firm or company
in which he is interested, subject only to the general limitations herein
contained as to the sale and purchase of such Shares; and all subject to any
restrictions which may be contained in the Bylaws.
ACTION BY THE TRUSTEES
Section 4. The Trustees shall act by majority vote at a meeting duly called
or by unanimous written consent without a meeting, unless the 1940 Act requires
that a particular action be taken in person at a meeting of the Trustees.
Subject to the preceding sentence, the Trustees may participate in a meeting by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time. At
any meeting of the Trustees, a majority of the Trustees shall constitute a
quorum. Meetings of the Trustees may be called orally or in writing by any
Trustee. Notice of the time, date and place of all meetings of the Trustees
shall be given by the party calling the meeting to each Trustee by telephone or
telegram sent to his home or business address at least 24 hours in advance of
the meeting or by written notice mailed to his home or business address at least
72 hours in advance of the meeting. Notice need not be given to any Trustee who
attends the meeting without objecting to the lack of notice or who executes a
written waiver of notice with respect to the meeting, either before or after
holding the meeting. Subject to the requirements of the 1940 Act, the Trustees
by majority vote may delegate to any trustee their authority to approve
particular matters or take particular actions on behalf of the Trust.
EXECUTIVE COMMITTEE
Section 5. The Trustees may appoint an Executive Committee consisting of
two or more Trustees which, if so provided in the Bylaws or the resolution
appointing such Committee, shall consult with and advise the officers and agents
of the Trust in the management of its business and exercise all powers of the
Trustees that may be lawfully delegated to said Committee by the Trustees. If so
authorized, the members of the Executive Committee present at any meeting,
whether or not they constitute a quorum, may appoint another Trustee to act in
the place of an absent member of the Executive Committee. Vacancies on the
Executive Committee shall be filled by the Trustees at any regular or special
meeting. The Executive Committee shall keep regular minutes of its proceedings
and report the same to the Trustees when required.
OTHER COMMITTEES
Section 6. The Trustees may appoint other committees consisting in
each case of such number of Trustees (not less than two) and having and
exercising, to the extent permitted by law, such powers as the Trustees may
determine in the resolution appointing any such committee. A majority of all
members of any such committee may determine its action, and fix the time and
place of its meetings, unless the Trustees by resolution provide otherwise. The
members of any such committee present at any meeting, whether or not they
constitute a quorum, may appoint another Trustee to act in the place of an
absent member of the Committee. The Trustees shall have power at any time to
change the members and, to the extent permitted by law, the powers of any such
committee, to fill vacancies and to discharge any such committee. Each committee
shall keep regular minutes of its proceedings and report the same to the
Trustees when required.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets belonging to
the appropriate Series, as the case may be, for their expenses and
disbursements, in connection with the Trust or any Series, including, without
limitation, fees and expenses of Trustees who are not Interested Persons of the
Trust, interest expense, taxes, fees and commissions of every kind, expenses of
pricing Trust portfolio securities, expenses of issue, repurchase and redemption
of shares including expenses attributable to a program of periodic repurchases
or redemptions, expenses of registering and qualifying the Trust and its Shares
under Federal and State laws and regulations, charges of any Investment Adviser,
manager or sub-adviser, Principal Underwriter, custodian, transfer agent,
registrar, shareholder servicing agent and such other agents or independent
contractors, expenses of preparing and setting up in type prospectuses and
statements of additional information, expenses of printing and distributing
prospectuses and statements of additional information sent to existing
Shareholders, expenses of distribution of Shares pursuant to a plan adopted in
accordance with Rule 12b-1 under the 1940 Act, auditing and legal expenses,
reports to Shareholders, expenses of meetings of Shareholders and proxy
solicitations therefor, insurance expenses, association membership dues; and for
such non-recurring items as may arise, including litigation to which the Trust
is a party; and for all losses and liabilities by them incurred in administering
the Trust; and for the payment of such expenses, disbursements, losses and
liabilities the Trustees shall have a lien on the assets belonging to the Trust
or the appropriate Series prior to any rights or interests of the Shareholders
thereto. This section shall not preclude the Trust from paying any of the
aforementioned fees and expenses directly.
<PAGE>
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL
UNDERWRITER AND TRANSFER AGENT
INVESTMENT ADVISER
Section 1. Subject to a Majority Shareholder Vote, the Trustees may, in
their discretion from time to time, enter into an investment advisory or
management contract(s) with respect to the Trust or any Series thereof whereby
the other party(ies) to such contract(s) shall undertake to furnish the Trustees
such management, investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all upon such terms
and conditions, as the Trustees may in their discretion determine.
Notwithstanding any provisions of this Declaration of Trust, the Trustees may
authorize the Investment Adviser(s) (subject to such general or specific
instructions as the Trustee may from time to time adopt) to effect on behalf of
the Trustees purchases, sales or exchanges of portfolio securities and other
investment instruments of the Trust selected by such Investment Adviser without
further consultation with the Trustees or may authorize any officer, agent, or
Trustee to effect such purchases, sales or exchanges pursuant to instructions or
recommendations of the Investment Adviser (and all without further action by the
Trustees). Any such purchases, sales and exchanges shall be deemed to have been
authorized by all of the Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
including those relating to Shareholder approval, authorize the Investment
Adviser to employ one or more sub-advisers from time to time to perform such of
the acts and services of the Investment Adviser, and upon such terms and
conditions, as may be agreed upon between the Investment Adviser and any such
sub-adviser.
PRINCIPAL UNDERWRITER
Section 2. The Trustees may, in their discretion from time to time, enter
into a contract(s) providing for the sale of the Shares, whereby the Trust may
either agree to sell the Shares to the other party to the contract, or appoint
such other party its sales agent for such Shares. In either case, the contract
shall be on such terms and conditions as the Trustees may, in their discretion,
determine not inconsistent with the provisions of this Article VII; and such
contract may also provide for the redemption, repurchase or sale of Shares by
such other party as principal or as agent of the Trust.
TRANSFER AGENT, ADMINISTRATOR
Section 3. The Trustees may, in their discretion from time to time, enter
into transfer agency shareholder service and administration contracts, whereby
the Trustees delegate to the other party or parties to such contracts the
responsibility to furnish transfer agency shareholder service and administrative
services to the Shareholders and/or the Trust. The contracts shall be on such
terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust. Such services may
be provided by one or more entities.
PARTIES TO CONTRACT
Section 4. Any contract of the character described in Sections 1, 2 and 3
of this Article VII or in Article VIII may be entered into with any corporation,
firm, partnership, trust or association, although one or more of the Trustees,
officers of the Trust or Shareholders may be an officer, director, trustee,
shareholder or member of such other party (or affiliate of such other party) to
the contract, and no such contract shall be invalidated or rendered voidable by
reason of the existence of any relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of said contracts or accountable for any
profit realized directly or indirectly therefrom, provided that the contract
when entered into was reasonable and fair and not inconsistent with the
provisions of this Article VII or Article VIII, as the case may be. The same
person (inducing a firm, corporation, partnership, trust, or association) may be
the other party to contracts entered into pursuant to Sections 1, 2 and 3 above
or Article VIII, and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 4 without affecting the validity or enforceability thereof.
PROVISIONS AND AMENDMENTS
Section 5. Any contract entered into pursuant to Sections 1 and 2 of this
Article VII shall be consistent with and subject to the requirements of Section
15 of the 1940 Act with respect to its continuance and effect, its termination
and the method of authorization and approval of such contract or renewal
thereof; and no amendment to any contract entered into pursuant to Section 1 of
this Article VII shall be effective unless assented to by a Majority Shareholder
Vote.
ARTICLE VIII
CUSTODIAN
APPOINTMENT AND DUTIES
Section 1. Pursuant to the requirements of Section 17(f) of the 1940 Act,
the Trustees shall at all times employ a bank or trust company having capital,
surplus and undivided profits of at least $2,000,000 as custodian with delegated
authority as their agent:
(a) To hold the securities owned by the Trust and deliver the same upon
written order;
(b) To receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may direct; and
(c) To disburse such funds upon orders or vouchers. The Trustees may also
delegate, or cause to be delegated, obligations and responsibilities to such
custodian as their agent:
(d) To keep the books and accounts of the Trust and furnish clerical and
accounting services; and
(e) To compute, if authorized to do so by the Trustees, the Net Asset Value
of any Series in accordance with the provisions hereof. The basis of
compensation for the foregoing services shall be as agreed upon between the
Trustees and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians, from time to time, to perform such of the acts and services of
the custodian, and upon such terms and conditions as may be agreed upon between
the custodian and such sub-custodian and approved by the Trustees, provided that
in every case such sub-custodian shall be a bank or trust company organized
under the laws of the United States or one of the states thereof and having
capital, surplus and undivided profits of at least $2,000,000 or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act.
CENTRAL CERTIFICATE SYSTEM
Section 2. Subject to such rules, regulations and orders as the Commission
may adopt, the Trustees may authorize and/or direct the custodian to deposit all
or any part of the securities owned by the Trust in a system for the central
handling of securities established by a national securities exchange or a
national securities association registered with the Commission under the
Securities Exchange Act of 1934, as amended from time to time, or such other
person as may be permitted by the Commission, or otherwise in accordance with
the 1940 Act, pursuant to which system all securities of any particular series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal only
upon the order of the Trustees or their duly authorized agents (which may
include the Investment Adviser).
<PAGE>
ARTICLE IX
SHAREHOLDERS' VOTING POWERS, MEETINGS
AND INSPECTION OF RECORDS
VOTING POWERS
Section 1. The Shareholders shall have power to vote (i) for the election
of Trustees as provided in Article IV, Section 1, (ii) with respect to any
investment advisory or management contract as provided in Article VII, Section
1, (iii) with respect to the amendment of this Declaration of Trust as provided
in Article XII, Section 8, (iv) to the same extent as the shareholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, provided, however, that a
Shareholder of a particular Series shall not be entitled to bring any derivative
or class action on behalf of any other Series of the Trust and (v) with respect
to such additional matters relating to the Trust as may be required or
authorized by law, this Declaration of Trust or the Bylaws of the Trust, if any,
or any registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable. On any matter submitted to a vote of the
Shareholders, all shares shall be voted by individual Series, except (i) when
required by the 1940 Act, Shares shall be voted in the aggregate and not by
individual Series; and (ii) when the Trustees have determined that the matter
affects only the interests of one or more Series, then only the Shareholders of
such Series shall be entitled to vote thereon. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required or permitted by law,
this Declaration of Trust or any Bylaws of the Trust to be taken by
Shareholders.
MEETINGS
Section 2. Special meetings of the Shareholders of any Series may be called
by the Trustees and shall be called by the Trustees for the purpose of voting
upon their question of the removal of any Trustee or Trustees when requested in
writing so to do by the Shareholders of not less than ten per cent of the
outstanding Shares. Whenever ten or more Shareholders meeting the qualifications
set forth in Section 16(c) of the 1940 Act seek the opportunity of furnishing
materials to the other Shareholders with a view to obtaining signatures on such
a request for a meeting, the Trustees shall comply with the provisions of said
Section 16(c) with respect to providing such Shareholders access to the list of
Shareholders or the mailing of such materials to Shareholders. Shareholders
shall be entitled to at least fifteen days' notice of any meeting.
QUORUM AND REQUIRED VOTE
Section 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that holders of any Shares shall vote as a Series, then a majority
of the number of Shares of that Series entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that Series. Any lesser
number shall be sufficient for adjournments. Any adjourned session or sessions
may be held, within a reasonable time after the date set for the original
meeting, without the necessity of further notice. Except when a larger vote is
required by law, any provisions of this Declaration of Trust or the Bylaws, if
any, a majority of the Shares voted in person or by proxy shall decide any
questions and a plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or requires that the
holders of any Shares shall vote as a Series, then a majority of the Shares of
that Series voted on the matter shall decide that matter insofar as that Series
is concerned.
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken without a meeting
if a majority of Shareholders entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express provision of law or the
Declaration of Trust or the Bylaws) consent to the action in writing and such
written consents are filed with the records of the meetings of Shareholders.
Such consent shall be treated for purposes as a vote taken at a meeting of
Shareholders.
INSPECTION OF RECORDS
Section 5. The Trustees shall from time to time determine whether and to
what extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the Trust or any of them shall be open to
the inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees.
ARTICLE X
DISTRIBUTIONS, REDEMPTION AND REPURCHASES
AND NET ASSET VALUE
DISTRIBUTIONS
Section 1.
(a) The Trustees may, from time to time, distribute to the Shareholders of
each Series such income and capital gains, accrued or realized, as the Trustees
may in their discretion determine, after providing for actual and accrued
expenses and liabilities of such Series, (including such reserves as the
Trustees may establish), determined in accordance with good accounting
practices. The Trustees shall have full discretion to determine which items
shall be treated as income and which items as capital gains and their
determination shall be binding upon the Shareholders. Distributions shall be
made pro rata to the Shareholders of each Series in proportion to the number of
Shares of each Series held by each of them. Such distributions shall be made in
cash, in Shares or in kind, or a combination thereof, as determined by the
Trustees. Any such distribution paid (i) in Shares, will be paid at the Net
Asset Value thereof as determined in accordance with Article X, Section 4, and
(ii) in kind, will be paid at the value thereof as determined in accordance with
Article X, Section 4, and such determination shall be binding upon the
Shareholders.
Without limiting the generality of the
foregoing, the distributions of income and capital gains with respect to each
Series shall be in such amounts as may be declared from time to time by the
Trustees.
(b) The Trustees shall have power, to the fullest extent permitted by the
laws of Massachusetts, at any time to declare and cause to be paid distributions
on Shares of a particular Series, from the assets belonging to that Series,
which distributions, at the election of the Trustees, may be paid daily or
otherwise pursuant to a standing resolution or resolutions adopted with such
frequency as the Trustees may determine.
(c) Unless the Shareholder has notified the transfer agent in writing of
his election to receive such distributions in cash, distributions will be
reinvested at the Net Asset Value thereof at the close of business on the
reinvestment date established by the Trustees.
(d) Notwithstanding anything in this instrument to the contrary, the
Trustees may, at any time, declare and distribute pro rata among the
Shareholders of a particular Series, as of a record date for that Series, fixed
as provided in Article XII, Section 4 hereof, a "Share dividend."
REDEMPTIONS AND REPURCHASES
Section 2. In case any Shareholder of a particular Series desires to
dispose of his Shares, he may deposit at the office of the transfer agent or
other authorized agent of that Series a written request or such other form of
request as the Trustees may from time to time authorize, requesting that the
Series purchase the Shares in accordance with this Section 2; and any
Shareholder, upon following such procedures for redemption as the Trustees may
from time to time authorize, shall be entitled to require the Series to
purchase, and the Series or the Principal Underwriter of the Series shall
purchase, his said Shares, but only at the Net Asset Value thereof (as described
in Section 4 hereof). The Series shall make payment for any such Shares to be
redeemed, as aforesaid, in cash from the assets of that Series or, at the option
of the Series, wholly or partly in such portfolio securities of the Series as
the Series shall select, and the Trustees may authorize officers of the Trust or
the Principal Underwriter of the Series to make payment for such Shares to the
Shareholder of record within seven days after the date upon which the request is
effective. Any such redemption paid wholly or partly in portfolio securities
will be paid at the value thereof as determined in accordance with Article X,
Section 4, and such determination shall be binding on the Shareholders. The
Trustees may impose a sales charge upon the redemption of shares upon such terms
and conditions as the Trustees shall determine.
The Trust may elect, pursuant to Rule 18f-1 under the 1940 Act, to pay in
cash all requests for redemption by any Shareholder, limited in amount with
respect to each Shareholder during any ninety-day period to the less of (i)
$250,000, or (ii) 1% of the net asset value of the Trust at the beginning of
such period.
The Trust reserves the right, upon 60 days' prior written notice to the
Shareholder, to liquidate involuntarily any Shareholder's account if the
aggregate Net Asset Value as determined in Section 4 hereof of the Shares held
in the account is less than $10,000.
The Trust may also purchase or repurchase Shares at a price not exceeding
the Net Asset Value of such Shares in effect when the purchase or repurchase or
any contract, to purchase or repurchase is made.
The right of any holder of Shares redeemed or purchased by the Trust to
receive distributions thereon and all other rights of such holder with respect
to such Shares shall terminate at the time as of which the redemption or
purchase price of such Shares is determined or as otherwise described in the
current Prospectus or Statement of Additional Information for such Shares,
except the right of such holder to receive (i) the redemption or purchase price
of such Shares from the Trust or the Principal Underwriter, as the case may be,
and (ii) any distribution to which such holder has previously become entitled as
the record holder of such Shares on the record date for such distribution.
SUSPENSION OF THE RIGHT OF REDEMPTION
Section 3. The Trustees may declare a suspension of the right of redemption
or postpone the date of payment as permitted under the 1940 Act. Such suspension
shall take effect at such time as the Trustees shall specify but not later than
the close of business on the business day next following the declaration of
suspension, and thereafter there shall be no right of redemption or payment
until the Trustees shall declare the suspension at an end. In the case of a
suspension of the right of redemption, a Shareholder whose Shares have not been
redeemed may either withdraw his request for redemption or receive payment based
on the Net Asset Value per Share next determined after the termination of the
suspension.
DETERMINATION OF NET ASSET VALUE AND
VALUATION OF PORTFOLIO ASSETS
Section 4. The term Net Asset Value of any Series shall mean that amount by
which the assets of that Series exceed its liabilities, all as determined by or
under the direction of the Trustees. The Net Asset Value per Share shall be
determined separately for each Series and shall be determined on such days and
at such times as the Trustees may determine. Such determination shall be made
with respect to securities for which market quotations are readily available, at
the market value of such securities; and with respect to other securities and
assets, at the fair value as determined in good faith by the Trustees, provided,
however, that the Trustees, without Shareholder approval, may alter the method
of appraising portfolio securities insofar as permitted under the 1940 Act or
insofar as permitted by any order of the Commission applicable to the Series.
The Trustees may delegate any of their powers and duties under this Section 4
with respect to appraisal of assets and liabilities. At any time, the Trustees
may cause the Net Asset Value per Share last determined to be determined again
in similar manner and may fix the time when such redetermined value shall become
effective.
CONSTANT NET ASSET VALUE
Section 5. For the purpose of allowing the Net Asset Value per Share of any
Series to remain constant, the Trustees shall be entitled to declare, pay and
credit as dividends daily the net income (which may include or give effect to
realized and unrealized gains and losses, as determined in accordance with the
Trust's accounting and portfolio valuation policies) of any Series. If the
amount so determined for any day is negative, the Trustees shall be entitled,
without the payment of monetary compensation but in consideration of the
interest of the Series and its Shareholders in maintaining a constant Net Asset
Value per Share, to redeem pro rata from all Shareholders of the Series at the
time of such redemption (in proportion to their respective holdings of Shares)
such number of outstanding Shares of the Series, or fractions thereof, as shall
be required to permit the Net Asset Value per Share to remain constant. The
Trustees may delegate the powers and duties specified in this Section 5.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
Section 1. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees shall not be responsible for or liable in any event for
neglect or wrongdoing of any Trustee or any other officer, agent, employee or
Investment Adviser, Principal Underwriter, transfer agent or custodian of the
Trust, but nothing contained herein shall protect any Trustee against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Every note, bond, contract, instrument, certificate or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his capacity as Trustees or Trustee, and such Trustees or Trustee shall
not be personally liable thereon.
INDEMNIFICATION
Section 2.
(a) Subject to the exceptions and limitations contained in Section 2(b)
below:
(i) every person who is, or has been, a Trustee or officer of the
Trust (including persons who serve at the Trust's request as directors,
officers or Trustees of another organization in which the Trust has any
interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered person") shall be indemnified by the Trust or any Series to
the fullest extent permitted by law, against liability and against all
_______ reasonably incurred or paid by him in connection with a claim,
action, suit or proceeding in which he becomes involved, as a party or
otherwise, by virtue of his being or having been a Trustee or officer of
the Trust, and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and
the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities;
(b) No idemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office,
or (B) not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office,
(A) by the court or other body approving the settlement; or
(B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based
upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees or by
independent counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be such` Trustee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such person. Nothing contained herein shall affect any rights
to indemnification to which Trust personnel and any other persons, other than
Trustees and officers, may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described
subsection (a) of this Section 2 may be paid by the Trust or any Series from
time to time prior to final disposition thereof, upon receipt of an undertaking
by or on behalf of such Covered Person that such amount will be paid over by him
to the Trust or any Series of it is ultimately determined that he is not
entitled to indemnification under this Section 2; provided, however, that either
(i) such Covered Person shall have provided appropriate security for such
undertaking, or (ii) the Trust shall be insured against losses arising out of
any such advance payments, or (iii) either a majority of the Trustees who are
neither Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a trial-type inquiry or
full investigation), that there is reason to believe that such Covered Person
will be entitled to indemnification under this Section 2.
SHAREHOLDERS
Section 3. In case any Shareholder or former Shareholder of any
Series of the Trust shall be held to be personally liable solely by reason of
his being or having been a Shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor or
assigns) shall be entitled to be held harmless from and indemnified against all
loss and expense arising from such liability from the assets belonging to the
respective Series. A Series shall, upon request by a Shareholder thereof, assume
the defense of any claim made against the Shareholder for any act or obligation
of the Series and satisfy any judgment thereon.
ARTICLE XII
MISCELLANEOUS
TRUST, NOT A PARTNERSHIP
Section 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power to bind
personally either the Trust's officers or any Shareholder. All persons extending
credit to, contracting with or having any claim against the Trust or the
Trustees, or a particular Series of Shares, shall look only to the assets of the
Trust or the appropriate Series for payment under such credit, contract or
claim; and neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Declaration of Trust shall protect a
Trustee against any liability to which the Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee hereunder.
Every note, bond, contract or other undertaking made or issued by the
Trustees or by any officer or officers shall give notice that this Declaration
of Trust is on file with the Secretary of the Commonwealth of Massachusetts and
shall recite that the same was executed or made by or on behalf of the Trust or
by them as Trustee, Trustees, officer, or officers and not individually, and
that the obligations of such note, bond, contract or other undertaking are not
binding upon any of them or the Shareholders individually, but are binding only
upon the assets and property of the Trust, and may contain such further recital
as is deemed appropriate, but the omission thereof shall not operate to bind any
Trustee, officer or Shareholder individually.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon all Shareholders, Trustees, Officers of the
Trust and creditors of the Trust. Subject to the provisions of Section 1 of this
Article XII and to Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel or
other experts with respect to the meaning and operation of this Declaration of
Trust, and subject to the provisions of Section 1 of this Article XII and to
Article XI, shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is obtained.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
Section 3. No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees, or
upon their order.
ESTABLISHMENT OF RECORD DATES
Section 4. The Trustees may close the stock transfer books of the Trust for
a period not exceeding 90 days preceding the date of any meeting of
Shareholders, or the date for the payment of any dividends, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect; or in lieu of closing the stock transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding 90 days
preceding the date of any meeting of Shareholders, or the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend,
or to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after any such record date
fixed or aforesaid.
TERMINATION OF TRUST
Section 5.
(a) This Trust shall continue without limitation of time but subject to the
provisions of subsection (b) of this Section 5.
(b) Subject to a Majority Shareholder Vote of each Series affected by the
matter or, if applicable, to a Majority Shareholder Vote of the Trust, the
Trustees may
(i) sell and convey the assets of the Trust or any individual Series
to another trust, partnership, association or corporation organized under
the laws of any state which is a diversified open-end management investment
company as defined in the 1940 Act, for adequate consideration which shall
include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any individual Series,
and which may include shares of beneficial interest or stock of such trust,
partnership, association or corporation; or
(ii) at any time sell and convert into money all of the assets of the
Trust or any individual Series.
Upon making provision for the payment of all such liabilities in either (i)
or (ii) above, by such assumption or otherwise, the Trustees shall distribute
the remaining proceeds or the remaining assets (as the case may be) ratably
among the holders of the Shares of the Trust or any individual Series then
outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in subsection (b) above, the Trust or the
individual Series which was conveyed or converted shall terminate and the
Trustees shall be discharged of any and all further liabilities and duties
hereunder as regards the Trust or such Series; and the trust created hereby as
to the Trust or such Series shall terminate.
FILING OF COPIES, REFERENCES, HEADINGS
Section 6. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this instrument
and of each supplemental declaration of trust shall be filed by the Trustees
with the Secretary of the Commonwealth of Massachusetts, as well as any other
governmental office where such filing may be required from time to time. Anyone
dealing with the Trust may rely on a certificate executed by an officer or
Trustee of the Trust as to whether or not any such supplemental declarations of
trust have been made and as to any matters in connection with the Trust
hereunder, with the same effect as if it were the original, and may rely, on a
copy certified by an officer or Trustee of the Trust, of this instrument or of
any such supplemental declaration of trust. In this instrument or in any such
supplemental declaration of trust, references to this instrument, and all like
expressions such as "herein," "hereof" and "hereunder" shall be deemed to refer
to this instrument as amended or affected by any such supplemental declaration
of trust. Headings are placed herein for convenience of reference only and in
case of any conflict, the text of this instrument, rather than headings, shall
control.
APPLICABLE LAW
Section 7. The Trust set forth in this instrument is made in the
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such trusts.
AMENDMENTS
Section 8. If authorized by vote of the Trustees and a Majority Shareholder
Vote, or by any larger vote which may be required by applicable law or this
Declaration of Trust in any particular case, the Trustees shall amend or
otherwise supplement this instrument, by making a declaration of trust
supplemental hereto, which thereafter shall form a part hereof, except that an
amendment which shall affect the Shareholders of one or more Series shall be
authorized by a Majority Shareholder Vote of the Shares of such Series affected,
and no vote of Shareholders of a Series not affected shall be required. Subject
to applicable law, amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing, correcting
or supplementing any defective or inconsistent provision contained herein shall
not require authorization by Shareholder vote. Copies of any supplemental
declaration of trust shall be filed as specified in Section 6 of this Article
XII.
FISCAL YEAR
Section 9. The fiscal year of the Trust shall end on a date specified by
the Trustees; provided, however, that the Trustees may, without Shareholder
approval, change the fiscal year of the Trust.
<PAGE>
REGISTERED AGENT
Section 10. The Registered Agent of the Trust within the Commonwealth of
Massachusetts for service of process, and the principal place of business of the
Trust within the Commonwealth of Massachusetts, shall be U.S. Corporation
Company, One Court Street, Boston, Massachusetts 02108, or such other agent or
place, respectively, as the Trustees may designate from time to time by any
supplement to this Declaration of Trust.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
in the City and State of New York, for themselves and their assigns, as of the
date and year first above written.
/S/
--------------------------------
Eugene J. Glaser
/S/
--------------------------------
Richard J. Capalbo
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the 21 day of July, 1986, personally appeared before me the above-named
Eugene J. Glaser known to me, who acknowledged that he is a Trustee of BT
Tax-Free Investment Trust and that he executed the foregoing instrument of his
free act and deed, pursuant to authority of the Board of Trustees
/S/
--------------------------------
Notary Public
My commission expires:
LOLA R. BINGHAM
Notary Public, State of New York
No. 30-4616396
Qualified in Nassau County
Certified in New York County
Commission Expires March 30, 1987
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the 21 day of July, 1986, personally appeared before me the above-named
Richard J. Capalbo known to me, who acknowledged that he is a Trustee of BT
Tax-Free Investment Trust and that he executed the foregoing instrument of his
free act and deed, pursuant to authority of the Board of Trustees
/S/
--------------------------------
Notary Public
My commission expires:
LOLA R. BINGHAM
Notary Public, State of New York
No. 30-4616396
Qualified in Nassau County
Certified in New York County
Commission Expires March 30, 1987
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
---------------------
Secretary of the Commonwealth
STATE HOUSE - BOSTON, MA
SUPPLEMENT TO THE DECLARATION OF TRUST
We, Eugene J. Glaser, President and Trustee, and Richard J. Capalbo,
Trustee, of
BT TAX-FREE INVESTMENT TRUST
60 Broad Street
New York, New York 10004
do hereby certify that the attached Supplement to the Declaration of Trust of BT
Tax-Free Investment Trust supplements and amends the Declaration of Trust dated
July 21, 1986 of BT Tax-Free Investment Trust, and was adopted by resolution of
the Board of Trustees at a meeting duly called and held on August 4, 1986, in
accordance with the Declaration of Trust. This Supplement will become effective
upon filing, in accordance with Chapter 182, Section 2 of the GENERAL LAWS.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto
signed our names this 20 day of October, 1986.
/S/ /S/
------------------------------ ------------------------------
Eugene J. Glaser, President Richard J. Capalbo, Trustee
and Trustee
<PAGE>
Upon the effectiveness hereof, Article XII, Section 8 of the Declaration of
Trust dated July 21, 1986 shall be deleted and amended in its entirety by
replacement with the following insertion, and shall provide as follows:
"AMENDMENTS
Section 8. If authorized by vote of the Trustees and a Majority Shareholder
Vote, or by any larger vote which may be required by applicable law or this
Declaration of Trust in any particular case, the Trustees shall amend or
otherwise supplement this instrument, by making a declaration of trust
supplement hereto, which thereafter shall form a part hereof, except that as
amendment which shall affect the Shareholders of one or more Series shall be
authorized by a Majority Shareholder Vote of the Shares of such Series affected,
and no vote of Shareholders of a Series not affected shall be required. Subject
to applicable law, amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing, correcting
or supplementing any defective or inconsistent provision contained herein, or
either changing the par value of any Series' shares or amending in any way any
of the provisions in Article XI, Section 2 hereof, shall not require
authorization by Shareholder vote. Copies of any supplemental declaration of
trust shall be filed as specified in Section 6 of this Article XII."
Upon the effectiveness hereof, any reference in any document to the
Declaration of Trust dated July 21, 1986 shall refer to the same as supplemented
and amended hereby.
IN WITNESS WHEREOF, the undersigned, being Trustees of the Trust, have
executed this Supplement to the Declaration of Trust dated July 21, 1986 this 20
day of October, 1986.
/S/
--------------------------------
Eugene J. Glaser, President
and Trustee
/S/
--------------------------------
Richard J. Capalbo, Trustee
<PAGE>
SECOND SUPPLEMENT
TO THE
DECLARATION OF TRUST
OF
BT TAX-FREE INVESTMENT TRUST
The undersigned, being a majority of the Trustees of BT Tax-Free Investment
Trust (the "Trust"), a Massachusetts business trust created under a Declaration
of Trust dated July 21, 1986, as amended by a Supplement dated October 20, 1986
(the "Declaration"), hereby adopt the following amendments to the Declaration
and certify that the following supplement to the Declaration has been duly
adopted pursuant to Article XII, Section 8, of the Declaration.
Article I, Section 1, of the Declaration is hereby deleted in its entirety
and replaced with the following:
Section 1. This Trust shall be known as "BT Investment Funds" and the
Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
This Supplement will become effective upon filing, in accordance with
Chapter 182, Section 2, of the General Laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the undersigned Trustees of the Trust have set their
hands as of the 16th day of May, 1988.
/S/ /S/
----------------------------- ----------------------------
Charles P. Biggar Philip Saunders, Jr.
/S/ /S/
----------------------------- ----------------------------
S. Leland Dill Gerald M. Cole
/S/ /S/
----------------------------- ----------------------------
Kelvin J. Lancaster Janis S. England
<PAGE>
BY-LAWS
OF
BT TAX-FREE INVESTMENT TRUST
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust.These By-Laws shall be subject to
the Declaration of Trust dated July 21, 1986, as from time to time in effect or
supplemented (the "Trust Agreement"), of BT Tax-Free Investment Trust, the
Massachusetts business trust established by the Trust Agreement (the "Trust").
1.2 Principal and Registered Offices of the Trust. A registered office of
the Trust shall be located in Boston, Massachusetts. The principal office of the
Trust shall be located in New York, New York.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings.Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees.
2.2 Special Meetings.Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer of the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special meeting
to send notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present, and the meeting may be held as adjourned without further notice.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by telephone or
similar communications equipment, allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust shall be a
Chairman of the Trustees, a President, a Treasurer, a Secretary and such other
officers, including Vice Presidents, if any, as the Trustees from time to time
may in their discretion elect. The Trust may also have such agents as the
Trustees from time to time in their discretion may appoint. The Chairman of the
Trustees shall be a Trustee and may but need not be a shareholder; and any other
officer may be but none need be a Trustee or shareholder. Any two or more
offices may be held by the same person.
3.2 Election. The Chairman of the Trustees , the President, the Treasurer
and the Secretary shall be elected annually by the Trustees. Other officers, if
any, may be elected or appointed by the Trustees at any time. Vacancies in any
office may be filled at any time in accordance with the Trust Agreement.
3.3 Tenure. The Chairman of the Trustees, the President, the Treasurer and
the Secretary shall hold office until their respective successors are chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and each agent shall
retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Trust
Agreement set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise provide, the
Chairman of the Trustees, or, if there is none, or in the absence of the
Chairman, the President shall preside at all meetings of the shareholders and of
the Trustees. The President shall be the chief executive officer and, if so
designated by the Trustees, the chief financial officer.
3.6 Treasurer. The Treasurer shall be, in the absence of such designation
to the President, the chief financial and accounting officer of the Trust, and
shall, subject to the provisions of the Trust Agreement and to any arrangement
made by the Trustees with a custodian, investment adviser or manager, or
transfer, shareholder servicing or similar agent, be in charge of the valuable
papers, books of account and accounting records of the Trust, and shall have
such other duties and powers as may be designated from time to time by the
Trustees or by the President.
3.7 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8 Resignations and Removals.Any Trustee or officer may resign at any time
by written instrument signed by him or her and delivered to the Chairman, the
President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees then in
office, may elect from their number an Executive Committee or other committees
and may delegate thereto some or all of their powers except those which by law,
by the Trust Agreement, or by these By-Laws may not be delegated. Except as the
Trustees may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the Trustees or in
such rules, its business shall be conducted so far as possible in the same
manner as is provided by these By-Laws for the Trustees themselves. All members
of such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Records and proceedings of
any such committee shall be maintained in accordance with the Trust Agreement.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time and
in the manner required by the Trust Agreement or any applicable law. Officers
and Committees shall render such additional reports as they may deem desirable
or as may from time to time be required by the Trustees.
<PAGE>
ARTICLE 6
Seal
6.1 General. The seal of the Trust shall consist of a flat-faced die with
the word "Massachusetts," together with the name of the Trust and the year of
its organization cut or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 7
Execution of Papers
7.1 General. Except as the Trustees may generally or in particular cases
authorize the execution of documents in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust.
ARTICLE 8
Issuance of Share Certificates
8.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him, in such form as shall be prescribed from time to
time by the Trustees. Such certificate shall be signed by the President or a
Vice-President and by the Treasurer or Assistant Treasurer. Such signatures may
be facsimiles if the certificate is countersigned by a transfer agent, or by a
registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who hash signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he were such officer at
the time of its issue.
8.2 Loss of Certificates. In case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in a
place thereof, upon such terms and indemnity as the Trustees shall prescribe.
8.3 Issuance of New Certificate to Pledge. A pledge of shares transferred
as collateral security shall be entitled to a new certificate if the instrument
of transfer substantially describes the debt or duty that is intended to be
secured thereby. Such new certificate shall express on its face that it is held
as collateral security, and the name of the pledgor shall be stated thereon, who
alone shall be considered a shareholder for all purposes, and entitled to vote
thereon.
8.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the physical issuance of share certificates and may, by written
notice to each shareholder, require the surrender of physical share certificates
to the Trust for cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
<PAGE>
ARTICLE 9
Custodian
9.1 General. The Trust shall at all times employ a bank or trust company
having capital, surplus and undivided profits of at least Two Million Dollars
($2,000,000) as Custodian of the capital assets of the Trust. The Custodian
shall be compensated for its services by the Trust and upon such basis as shall
be agreed upon from time to time between the Trust and the Custodian.
ARTICLE 10
Dealings with Trustees and Officers
Any Trustee, officer or other agent of the Trust may acquire, own and
dispose of shares of the Trust to the same extent as if he were not a trustee,
officer or agent; and the Trustees may accept subscriptions to shares or
repurchase shares from any firm or company in which he is interested.
ARTICLE 11
Shareholders
11.1 Meetings. A meeting of the shareholders of the Trust shall be held
whenever called by the Trustees and whenever election of a Trustee or Trustees
by shareholders is required by the provisions of Section 16(a) of the Investment
Company Act of 1940, as amended (the "1940 Act") for that purpose. The Trustees
shall promptly call and give notice of a meeting of shareholders for the purpose
of voting upon removal of any Trustee of the Trust when requested to do so in
writing by shareholders holding not less than 10% of the shares then
outstanding.
11.2 Record Dates. For the purpose of determining the shareholders who are
entitled to vote or act at any meeting or ________ adjournment thereof, or who
are entitled to receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a time, which shall be not more than 90
nor less than ten days before the date of any meeting of shareholders or the
date for the payment of any dividend or of any other distribution, as the record
date for determining the shareholders having the right to notice of and to vote
at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right, notwithstanding any transfer of shares on the
books of the Trust after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer books for all
or any part of such period.
ARTICLE 12
Amendments to the By-Laws
12.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
BT Investment Funds:
We consent to the inclusion in this Post-Effective Amendment to the Registration
Statement of the BT Investment Lifecycle Short Range Fund (one of the funds
comprising BT Investment Funds) on Form N-1A of our report dated April 27, 1995
on our audit of the financial statements and financial highlights of the Fund,
which report is included in the Annual Report to Shareholders for the year ended
March 31, 1995 which is included in the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
July 25, 1995
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
BT Investment Funds:
We consent to the inclusion in this Post-Effective Amendment to the Registration
Statement of the BT Investment Lifecycle Mid Range Fund (one of the funds
comprising BT Investment Funds) on Form N-1A of our report dated April 27, 1995
on our audit of the financial statements and financial highlights of the Fund,
which report is included in the Annual Report to Shareholders for the year ended
March 31, 1995 which is included in the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
July 25, 1995
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
BT Investment Funds:
We consent to the inclusion in this Post-Effective Amendment to the Registration
Statement of the BT Investment Lifecycle Long Range Fund (one of the funds
comprising BT Investment Funds) on Form N-1A of our report dated April 27, 1995
on our audit of the financial statements and financial highlights of the Fund,
which report is included in the Annual Report to Shareholders for the year ended
March 31, 1995 which is included in the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
July 25, 1995
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of the
Asset Management Portfolio:
We consent to the inclusion in this Post-Effective Amendment to the Registration
Statement of the Asset Management Portfolio on Form N-1A of our report dated
April 27, 1995 on our audit of the financial statements and financial highlights
of the Portfolio, which report is included in the Annual Report to Shareholders
for the year ended March 31, 1995 which is included in the Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
July 25, 1995
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of the
Asset Management Portfolio II:
We consent to the inclusion in this Post-Effective Amendment to the Registration
Statement of the Asset Management Portfolio II on Form N-1A of our report dated
April 27, 1995 on our audit of the financial statements and financial highlights
of the Portfolio, which report is included in the Annual Report to Shareholders
for the year ended March 31, 1995 which is included in the Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
July 25, 1995
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of the
Asset Management Portfolio III:
We consent to the inclusion in this Post-Effective Amendment to the Registration
Statement of the Asset Management Portfolio III on Form N-1A of our report dated
April 27, 1995 on our audit of the financial statements and financial highlights
of the Portfolio, which report is included in the Annual Report to Shareholders
for the year ended March 31, 1995 which is included in the Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
July 25, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Information extracted from the BT
Investment Lifecycle Long Range Fund Annual Report dated March 31, 1995 and is
qualified in its by reference to such Annual Report.
</LEGEND>
<CIK> 0000797657
<NAME>BT INVESTMENT FUNDS
<SERIES>
<NUMBER> 12
<NAME> LIFECYCLE LONG RANGE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 13,200,687
<RECEIVABLES> 177,703
<ASSETS-OTHER> 22,223
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,400,623
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34,579
<TOTAL-LIABILITIES> 34,579
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,978,690
<SHARES-COMMON-STOCK> 1,326,853
<SHARES-COMMON-PRIOR> 537,708
<ACCUMULATED-NII-CURRENT> 119,744
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (37,813)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 305,423
<NET-ASSETS> 13,366,044
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 409,814
<OTHER-INCOME> 0
<EXPENSES-NET> 42,994
<NET-INVESTMENT-INCOME> 366,820
<REALIZED-GAINS-CURRENT> 36,650
<APPREC-INCREASE-CURRENT> 394,165
<NET-CHANGE-FROM-OPS> 797,635
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 256,078
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 882,368
<NUMBER-OF-SHARES-REDEEMED> 120,211
<SHARES-REINVESTED> 26,988
<NET-CHANGE-IN-ASSETS> 8,162,922
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 120,387
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.68
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> .32
<PER-SHARE-DIVIDEND> .23
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the BT
Investment Lifecycle Mid Range Fund Annual Report dated March 31, 1995 and is
qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000797657
<NAME> THE BT INVESTMENT FUNDS
<SERIES>
<NUMBER>
<NAME> LIFECYCLE MID RANGE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 25,604,379
<RECEIVABLES> 146,403
<ASSETS-OTHER> 18,816
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,769,598
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36,510
<TOTAL-LIABILITIES> 36,510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,182,189
<SHARES-COMMON-STOCK> 2,678,186
<SHARES-COMMON-PRIOR> 2,028,045
<ACCUMULATED-NII-CURRENT> 287,551
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (818,164)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 81,512
<NET-ASSETS> 25,733,088
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,060,282
<OTHER-INCOME> 0
<EXPENSES-NET> 96,225
<NET-INVESTMENT-INCOME> 964,057
<REALIZED-GAINS-CURRENT> (691,504)
<APPREC-INCREASE-CURRENT> 436,647
<NET-CHANGE-FROM-OPS> 1,274,280
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 791,477
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 821,762
<NUMBER-OF-SHARES-REDEEMED> 257,635
<SHARES-REINVESTED> 86,014
<NET-CHANGE-IN-ASSETS> 6,562,817
<ACCUMULATED-NII-PRIOR> 114,971
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 213,092
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.45
<PER-SHARE-NII> .37
<PER-SHARE-GAIN-APPREC> .11
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .32
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.61
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Information extracted from the BT
Investment Lifecycle Short Range Fund Annual Report dated March 31, 1995 and is
qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000797657
<NAME> BT INVESTMENT FUNDS
<SERIES>
<NUMBER> 14
<NAME> LIFECYCLE SHORT RANGE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 21,201,590
<RECEIVABLES> 0
<ASSETS-OTHER> 18,830
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,220,420
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 83,282
<TOTAL-LIABILITIES> 83,282
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,950,255
<SHARES-COMMON-STOCK> 2,224,112
<SHARES-COMMON-PRIOR> 1,831,128
<ACCUMULATED-NII-CURRENT> 267,916
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (919,434)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (161,599)
<NET-ASSETS> 21,137,138
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,019,157
<OTHER-INCOME> 0
<EXPENSES-NET> 83,789
<NET-INVESTMENT-INCOME> 935,678
<REALIZED-GAINS-CURRENT> (783,142)
<APPREC-INCREASE-CURRENT> 505,973
<NET-CHANGE-FROM-OPS> 658,509
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 798,960
<DISTRIBUTIONS-OF-GAINS> 31,898
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 585,939
<NUMBER-OF-SHARES-REDEEMED> 282,622
<SHARES-REINVESTED> 89,667
<NET-CHANGE-IN-ASSETS> 3,555,179
<ACCUMULATED-NII-PRIOR> 131,198
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 193,323
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.60
<PER-SHARE-NII> .41
<PER-SHARE-GAIN-APPREC> (.13)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .38
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.50
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Information extracted from the BT
Investment Lifecycle Short Range Fund Annual Report dated March 31, 1995 and is
qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000797657
<NAME> BT INVESTMENT FUNDS
<SERIES>
<NUMBER> 14
<NAME> LIFECYCLE MID RANGE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 21,201,590
<RECEIVABLES> 0
<ASSETS-OTHER> 18,830
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,220,420
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 83,282
<TOTAL-LIABILITIES> 83,282
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,950,255
<SHARES-COMMON-STOCK> 2,224,112
<SHARES-COMMON-PRIOR> 1,831,128
<ACCUMULATED-NII-CURRENT> 267,916
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (919,434)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (161,599)
<NET-ASSETS> 21,137,138
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,019,157
<OTHER-INCOME> 0
<EXPENSES-NET> 83,789
<NET-INVESTMENT-INCOME> 935,678
<REALIZED-GAINS-CURRENT> (783,142)
<APPREC-INCREASE-CURRENT> 505,973
<NET-CHANGE-FROM-OPS> 658,509
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 798,960
<DISTRIBUTIONS-OF-GAINS> 31,898
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 585,939
<NUMBER-OF-SHARES-REDEEMED> 282,622
<SHARES-REINVESTED> 89,667
<NET-CHANGE-IN-ASSETS> 3,555,179
<ACCUMULATED-NII-PRIOR> 131,198
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 193,323
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.60
<PER-SHARE-NII> .41
<PER-SHARE-GAIN-APPREC> (.13)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .38
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.50
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Data extracted from the March 31, 1995
BT Asset management Portfolio Anual Report and is qualified in its entirety by
reference to such Annual Report.
</LEGEND>
<CIK> 0000888569
<NAME> BT ASSET MANAGEMENT PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 99,989,525
<INVESTMENTS-AT-VALUE> 101,692,645
<RECEIVABLES> 462,486
<ASSETS-OTHER> 13,994
<OTHER-ITEMS-ASSETS> 19,295
<TOTAL-ASSETS> 102,188,420
<PAYABLE-FOR-SECURITIES> 5,570,952
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 88,704
<TOTAL-LIABILITIES> 5,659,656
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 94,617,119
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,911,645
<NET-ASSETS> 96,528,764
<DIVIDEND-INCOME> 1,249,032
<INTEREST-INCOME> 2,633,639
<OTHER-INCOME> 0
<EXPENSES-NET> 531,827
<NET-INVESTMENT-INCOME> 3,350,844
<REALIZED-GAINS-CURRENT> (85,052)
<APPREC-INCREASE-CURRENT> 3,010,076
<NET-CHANGE-FROM-OPS> 6,275,868
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 60,245,582
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 576,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 700,986
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial information extracted from the BT
Investment Asset Managment Portfolio II Annual Report dated March 31, 1995 and
is qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK>0000906619
<NAME>BT INVESTMENT PORTFOLIOS
<SERIES>
<NUMBER> 3
<NAME> ASSET MANAGEMENT PORTFOLIO II
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 27,093,366
<INVESTMENTS-AT-VALUE> 27,041,997
<RECEIVABLES> 137,284
<ASSETS-OTHER> 18,106
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,197,387
<PAYABLE-FOR-SECURITIES> 46,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,592,997
<TOTAL-LIABILITIES> 1,592,997
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,522,878
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 81,512
<NET-ASSETS> 25,604,390
<DIVIDEND-INCOME> 163,473
<INTEREST-INCOME> 1,041,198
<OTHER-INCOME> 0
<EXPENSES-NET> 144,389
<NET-INVESTMENT-INCOME> 1,060,282
<REALIZED-GAINS-CURRENT> (692,504)
<APPREC-INCREASE-CURRENT> 1,002,727
<NET-CHANGE-FROM-OPS> 1,370,505
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,429,024
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 156,421
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 210,137
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Information extracted from the BT
Investment Asset Management portfolio III Annual Report dated March 31, 1995 and
is qualified in tis entirety by reference to such Annual Report.
</LEGEND>
<CIK>0000906619
<NAME> BT INVESTMENT PORTFOLIOS
<SERIES>
<NUMBER> 4
<NAME>ASSET MANAGEMENT PORTFOLIO III
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 26,709,353
<INVESTMENTS-AT-VALUE> 26,577,067
<RECEIVABLES> 182,980
<ASSETS-OTHER> 19,598
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,779,645
<PAYABLE-FOR-SECURITIES> 5,540,037
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,008
<TOTAL-LIABILITIES> 21,201,600
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,363,199
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 161,599
<NET-ASSETS> 21,201,600
<DIVIDEND-INCOME> 87,156
<INTEREST-INCOME> 1,058,033
<OTHER-INCOME> 0
<EXPENSES-NET> 125,722
<NET-INVESTMENT-INCOME> 1,019,467
<REALIZED-GAINS-CURRENT> (783,153)
<APPREC-INCREASE-CURRENT> 505,973
<NET-CHANGE-FROM-OPS> 742,287
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,615,274
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 136,199
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 187,739
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
